Stocks
NSE launches three new indices

The stocks in these new indices are selected from the top 300 companies on the NSE based on their average free-float market capitalisation and aggregate turnover for the last six months

 
Mumbai: India Index Services & Products, a joint venture between the National Stock Exchange (NSE) and ratings agency CRISIL, has launched three new indices -- the CNX Low Volatility Index, the CNX High Beta Index and the CNX Alpha Index, reports PTI.
 
The CNX Low Volatility index aims to measure the performance of the least volatile securities listed on the NSE, to create a portfolio of least-volatile securities which shall curb the downside during the bear phases, IISL said.
 
The index comprises 50 securities and weights are assigned based on the volatility value. Security, having the lowest-volatility in the index, gets the highest weight, the release said.
 
The CNX High Beta Index aims to measure the performance of the stocks listed on NSE that have high beta. Beta is a measure of the sensitivity of stock returns to market returns.
 
This index is represented by the performance of the S&P CNX Nifty and constitutes 50 securities and weights are assigned based on their Beta values. Stocks having the highest beta get the highest weight, it said.
 
The index, the CNX Alpha Index, aims to measure the performance of those NSE stocks with high alpha value which are measured on the basis of their risk-adjusted value.
 
The index also constitutes 50 securities and weights are assigned based on the alpha values and accordingly those scrips with the highest alpha will have highest weight in the index.
 
The stocks in these indices are selected from the top 300 companies on the NSE based on their average free-float market capitalisation and aggregate turnover for the last six months.
 
It also said the top 50 securities ranked by low volatility, high beta and high alpha form part of respective index and to reduce the replacements of scrip in the index, a buffer of 100% shall be applied in the quarterly reviews, for all the three indices.
 
The indices will be calculated on an end-of-day basis and their closing value would be available the NSE.
 

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Reliance Cap in talks for stake sale in general insurance arm

Reliance Capital, the financial services arm of Anil Ambani-led Reliance Group, has already sold 26% stake in each of its mutual funds and life insurance units to Nippon Life

 
Mumbai: Financial services provider Reliance Capital group has begun talks to sell 26% equity in its general insurance unit to a foreign partner, and is open to selling further stake in life insurance and mutual fund units, reports PTI.
 
"We are in talks for sale of 26% stake in general insurance business to a foreign strategic partner," Reliance Capital CEO Sam Ghosh told PTI in an interview.
 
Without disclosing any names or potential deal size for Reliance General Insurance stake sale, Ghosh said that nothing has been finalised as yet and talks are still continuing.
 
Reliance Capital, the financial services arm of Anil Ambani-led Reliance Group, has already sold 26% stake in each of its mutual funds and life insurance units to Japanese financial services major Nippon Life.
 
Reliance Capital chief said the group is open to the idea of selling further stake in its life insurance unit, Reliance Life, as also in mutual funds arm, Reliance Capital Asset Management Company, at an appropriate time and the understanding with Nippon Life in this regard is "open-ended".
 
Nippon Life, one of the world's largest financial services group with assets under management of over $600 billion (more than Rs30 lakh crore), is a major player in life insurance and asset management businesses in Asia, but is not present in general insurance segment.
 
Currently, foreign investment is capped at 26% in the insurance business in India, but there are no such caps in the mutual funds segment. However, the government is considering increasing the foreign investment limit in the insurance sector to 49%.
 
Asked whether the group would be open to the idea of Nippon having a higher stake in Reliance Life when government hikes insurance FDI cap to 49%, Ghosh said: "The two companies have an understanding that if the market is opened up further, they would discuss the issue at that time." 
 
"Any decision in that regard will be taken only after the government further opens the sector and current understanding between the two partners is open-ended," he said.
 
Asked whether Reliance Cap would consider higher stake for Nippon Life in its mutual fund business as well, Ghosh said that the understanding was same for Reliance Capital Asset Management Company as well.
 
"Currently, there are no discussions underway for a hike in Nippon's stake in RCAM (Reliance Capital Asset Management Company), although there is no FDI cap in this business, but the understanding is open-ended between the two partners on this front," he said.
 
Nippon holds 26% stake in RCAM, which it acquired for about Rs1,450 crore. Besides, Nippon has also purchased a 26% stake in Reliance Life for over Rs3,000 crore.
 

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SEBI relaxes mutual fund exposure limit for housing finance companies

SEBI decided that an additional exposure not exceeding 10% of net assets of the scheme shall be allowed only to HFCs as part of financial services sector for prudential limits in debt oriented schemes

 
Mumbai: Providing more leeway for housing finance companies, market regulator Securities and Exchange Board of India (SEBI) has relaxed the investment limit for such entities in debt mutual funds, reports PTI.
 
The decision to relax the investment limit for housing finance companies (HFCs) was taken by SEBI at its board meeting held in October.
 
"... in light of the important role played by the housing finance companies (HFCs) in the housing sector, it has been decided that an additional exposure not exceeding 10% of net assets of the scheme shall be allowed only to HFCs as part of financial services sector for prudential limits in debt oriented schemes," SEBI said in a circular today.
 
The total investment in HFCs shall not exceed 30% of the net assets of the scheme.
 
SEBI said the relaxation would be subject to certain conditions such as that the securities issued by HFCs were rated 'AA' or above. Also, the HFCs should have been registered with the National Housing Bank (NHB).
 
In October, the market regulator had said the decision to relax investment limit was taken after taking into consideration the important role played by HFCs in fulfilling the social objective of increased home ownership and supporting the economy by creating demand for construction of new homes.
 
Certain debt mutual fund schemes, such as long-term Fixed Maturity Plans are a preferred route for the NBFC (Non-Banking Finance Company) sector to raise medium to long term funds at attractive rates.
 
Under the regulatory framework, NBFCs include HFCs.
 

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