If Nifty closes below 8,540, a short decline would be on the cards
In line with the positive closing of the US indices on Wednesday and almost all the Asian indices today, the Indian benchmarks opened Thursday with a huge gap up. While NSE’s CNX Nifty immediately hit a new all-time high, the S&P BSE Sensex went on to hit a few points lower than the all-time. However, immediately, selling started and the market started to drift lower.
Sensex opened at 28,617 and moved to a low of 28,449 after hitting a high of 28,809.
Nifty opened at 8,582 and hit a high 8,627 before reaching the low of 8,526. Sensex closed at 28,563 (up 120 points or 0.42%) while Nifty closed at 8,564 (up 27 points or 0.31%). The NSE recorded a volume of 96.56 crore shares. India VIX rose 0.62% to close at 12.4450.
The finance ministry announced the setting up of a high-level committee to interact with trade and industry on tax laws, after trading hours on Wednesday.
The Minister of State for Petroleum & Natural Gas Dharmendra Pradhan informed Rajya Sabha in a written reply on Wednesday that the Kelkar Committee has recommended on the production-sharing contract (PSC) model as the preferred contractual model for Indian basins. The committee has proposed two fiscal regimes either of which could be deployed. The government has not finalised its response to the Kelkar Committee report, Pradhan said.
The Coal Ministry said that it will auction or allot 18 more coal blocks in addition to the already announced 74 mines for sale in the first lot to meet the growing demand for the fossil fuel. Out of the 92 coal blocks to be allotted and auctioned in the first lot, 57 mines would be given to the power sector, while the remaining mines would be for the sectors like steel and cement, the Secretary said.
World food prices were stable for the third consecutive month in November, as higher cereals and vegetable oils prices were counteracted by marked falls in sugar and dairy products, the UN's food agency said on Thursday. The Food and Agriculture Organisation's price index averaged 192.6 points in November, barely down from 192.7 in October.
Government has launched four schemes, including a technology mission, for promotion and growth of technical textiles, Lok Sabha was informed today.
Coming back to market, ABB India (12.98%) was the top gainer in ‘A’ group on the BSE. The stock hit its 52-week high today. ABB yesterday announced that it has won orders worth Rs334 crore from public utilities, Bihar Grid Corp and West Bengal State Electricity Transmission Co, to build new transmission and distribution substations that will boost power supplies in the region.
Gitanjali Gems, which was recently in demand after government eased gold import norms, today corrected further for the second consecutive session. The stock fell 3.60% and was among the top four losers in the ‘A’ group on the BSE.
Reports indicate that the Indian government may take wider consultations before bringing any amendments to the existing laws to restrict the sale of loose cigarettes. ITC (5.44%) was the top gainer in Sensex 30 pack. Bharti Airtel (2.08%) was the top loser in Sensex 30 pack.
On Wednesday, US indices closed in the green. In economic data, a reading of private sector employment released on Wednesday showed that hiring slowed in November, though employers added more than 200,000 jobs in seven of the past eight months. The productivity for the third quarter was revised upwards, however, labour costs fell, pointing at lagging wages.
Meanwhile, US services companies reported that growth ramped up in November, with a gauge of activity rising to 59.3% in November from 57.1% in October, according to a survey of senior executives released yesterday, 3 December 2014 by the Institute for Supply Management.
Except for KLSE Composite (0.71%) all the other Asian indices closed in the green.
Shanghai Composite (4.31%) was the top gainer. European indices were trading in the green. US Futures were trading marginally in the green.
The TReDS will be an authorised payment system and also be subject to the oversight of the RBI
The Reserve Bank of India (RBI) on Thursday issued operative guidelines for mobile banking transactions seeking to standardise mobile banking services.
The guidelines for setting up and operating the Trade Receivables Discounting System (TReDS), a scheme for setting up and operating the institutional mechanism to facilitate the financing of trade receivables of micro, small and medium enterprises (MSMEs) from corporate and other buyers, including government departments and public sector undertakings (PSUs) through multiple financiers.
In the first phase, the TReDS would facilitate the discounting of these factoring units by the financiers resulting in flow of funds to the MSME with final payment of the factoring unit being made by the buyer to the financier on due date. In the second phase, the TReDS would enable further discounting, re-discounting of the discounted factoring units by the financiers, thus resulting in its assignment in favour of other financiers.
According to RBI, entities desirous of setting up and operating the TReDS are required to have a capital of Rs25 crore, it should be able to provide electronic platform, have a robust MIS system to dissemination information in real time basis, a suitable business continuity plan and online surveillance capability to monitor positions, prices and volumes in real time so as to check system manipulation.
Last year in September, RBI governor had declared the central bank's intention to facilitate Electronic Bill Factoring Exchanges in the country, which could electronically accept and auction MSME bills against large companies so that MSMEs could be paid promptly.
MSME sector faces the problem of delayed payment mainly due to their dependency on their buyers within corporate and other sectors, including government departments, undertakings. They are often unable to take up the problem of delayed payments through appropriate institutional setup created for the purpose.
The results and analysis for Moneylife's survey on questions relating to savings, investments and health & life insurance
The life of a financial consumer is not easy. Regulators tell you to get financially educated but we don’t have much scope to acquire the unbiased information we need; too much of what we read and hear is not in our interest or contradicts one another. But there is no escape from having to deal with myriad financial questions.
To check where Moneylife readers stand on the financial literacy scale, we decided to conduct a survey that included questions relating to savings, investments and health & life insurance. Here are the results of the survey with our comments on how most people have answered each question.
It’s heartening to see that more than 50% respondents have said that they save more than 25% of their income. Another 23.6% save at least 15%. Only 22.3% of the respondents have admitted to saving less than 15%. For many, a low level of savings may not be their fault. They are probably paying back home loan instalments through their nose, to have a roof over their head.
More than 68% have money in bank fixed deposits (FDs) (we are surprised it’s not 95%); but many are putting money in debt mutual funds, tax-free bonds, even insurance policies and annuities. While fixed-income does remain the asset class of choice (73.2%), remarkably, 67.9% have invested in equity mutual funds and shares.
Almost 28% of the respondents skipped this question, unsure of the answer. Barely 50% of the respondents were firm that none of these was fixed-income investment.
What is it that attracts investors most to fixed-income products? The two most popular attributes were capital protection and guaranteed returns. Interestingly, 16% of the respondents said that they don’t prefer to invest in fixed-income products. We also wanted to check whether investors have either too high or too low expectation of returns from fixed-income.
Almost 55% of respondents expected a return of 7%-9% from fixed income while 28.2% expected a return of more than 9%, which is unrealistic. On the other hand, about 24% of the respondents expected less than 7% return from fixed-income.
When asked about the proportion of equity funds and shares in their financial investment, only 30.5% said that it is over 50%. More than 40% have less than 25% of their money invested in equity funds and shares. They are not likely to create much wealth over the long term.
What were the main concerns of investors regarding mutual funds? Almost 40% of the respondents were worried about poor performance of fund managers. One-third were hassled by too many schemes to choose from. Both these issues can be addressed easily.
Analyse the performance record of 10 years or more and choose among the five or seven best. After all, these schemes have proven themselves over different market cycles.
Over 72% of the respondents have health insurance (mediclaim), which is an encouraging sign. Unfortunately, only 26% of the respondents have personal accident (PA) policy. A comprehensive PA policy, covering permanent total disability, permanent partial disability and temporary total disability, is a must for everyone.
The 24-hour hospitalisation rule topped (35.9%) as the main issue with health insurance. The obstacle is the mechanical rejection of claims even if hospital discharge is done minutes before completion of 24-hour stay. The criticality of medical need of the insured and the expense incurred for less than 24-hour stay is not considered.
TPA’s behaviour (25%) and cashless issues (25.8%) also attracted a lot of criticism. Sub-limits (22%), room rent limit (21.5%), stringent timeliness for hospitalisation intimation (20.3%) and stringent timelines for claims submission (17.3%) were other important factors for customers. Surprisingly, high premium (19%) and changes in product features (13.2%) are still not a major issue for consumers.
Thirty per cent of the respondents have an endowment plan which is a popular product. While LIC’s endowment plan with a term of more than 15 years has given a return of approximately 7%pa, we do not know what is store for the policyholders in future.
Over 45% of the respondents already have term plan; 12% do not need life insurance. For the remaining, the main reason for not buying term plan is the classic reason—‘need to get returns on maturity’ (8.4% respondents). For them, the kind of returns is not important. Insurance is considered as a waste if nothing is given back at the end of the policy period.
The main reason for buying an offline term plan, instead of online term plan, is the worry about claims settlement of online term plans. Just around 10% of the respondents need agent’s help to buy insurance. That is good because agents will sell what he/she is asked to push, not what you need, namely, term plan. Difficulty in buying term plan online can be due to the do-it-yourself process.
For a detailed analysis and a look into the common mistakes, misconception and problems with investors' perceptions about financial services, do follow the in-depth story here