Sensex, Nifty head lower: Wednesday closing report

For Nifty to arrest its downtrend, Nifty has to close above 5907

Except for a small positive move, which happened yesterday, the market fell for the third day, ahead of the expiry of the futures and options which is tomorrow. Except for a little while when the indices today moved in the green, the benchmarks were pulled down in to the negative and stayed there till the end of the session.


The Sensex and the Nifty, for the first time after three trading session, opened in the positive. The Sensex opened at 19,947 and immediately hit its daily high of 19,978 while the Nifty opened at 5,902 and hit a high of 5,911. In the noon session the indices hit their lows after which they made smart recovery. The Sensex hit a low of 19,659 and closed at 19,856 (down 64 points or 0.32%). The Nifty hit a low of 5,811 and closed at 5,874 (down 19 points or 0.32%). The National Stock Exchange (NSE) recorded a volume of 59.53 crore shares.


The top five gainers among the other indices on the NSE were Media (2.60%); PSU Bank (1.76%); Infra (1.59%); Pharma (1.32%) and PSE (1.21%) while the top five losers were FMCG (1.00%); Finance (0.99%); Bank Nifty (0.93%); Energy (0.91%) and Realty (0.25%).
Of the 50 stocks on the Nifty, 22 ended in the green. The top five gainers were BHEL (8.91%); Sesa Goa (4.34%); Hindalco (3.75%); State Bank of India (2.86%) and NTPC (2.51%). The top five losers were BPCL (3.28%); Reliance Industries (3.21%); HDFC Bank (2.91%); M&M (2.81%) and DLF (2.64%).

Minister of Petroleum & Natural Gas Dr M Veerappa Moily on Tuesday, 24 September 2013, ruled out any steep increase in diesel and cooking-fuel prices. The government's decision on Tuesday, 24 September 2013, not to raise fuel prices has sparked concerns about the government's fiscal deficit. Moily asked the people of India to conserve petroleum products to help the government's finances and reduce the country's oil-import bill.


The Cabinet Committee on Economic Affairs on Tuesday approved the proposal of the ministry of petroleum and natural gas on the policy on exploration and exploitation of shale gas and oil by National Oil Companies (NOCs) on acreages under the nomination regime. This policy will allow NOCs to carry out exploration and exploitation of unconventional hydro-carbon resources particularly, shale gas and oil in their already awarded onland petroleum exploration license/petroleum mining lease acreages under the nomination regime.


Cabinet Committee on Economic Affairs on Tuesday approved the methodology for auctioning coal blocks, enabling the government to allot coal mining licences through competitive bidding to private companies.


Prime Minister Manmohan Singh constituted the 7th Pay Commission today. The new pay scale recommended by the Pay Commission will be implemented from 1 January 2016.


The government is formulating a scheme to encourage technological acquisition and R&D activities in the capital goods sector to help reduce dependence on imports of such goods.


US indices had a mixed performance on Tuesday. The drop in consumer confidence and worries over a Washington debt-ceiling fight outweighed a rise in home prices and easing concerns over the Middle East.


Investors are worried about Washington’s new budget for the fiscal year that starts on 1 October 2013 and, more importantly, over whether to lift the debt ceiling. Ratings firm Moody's Investors Service on Tuesday said a failure by the US government to raise the country's debt limit would result in a worse outcome for financial markets than a government shutdown.


The Conference Board's index of US consumer confidence slumped in September to a four-month low and a separate report showed a gauge of manufacturing in the region covered by the Federal Reserve Bank of Richmond shrank in September. The Case-Shiller report on US home prices showed prices rose in July, but at a slower pace.


US President Barack Obama on Tuesday said that the US is committed to finding diplomatic solutions for the Syria conflict and for the ongoing dispute with Iran over its nuclear program.


Except for Hang Seng (up 0.13%) and NZSE 50 (up 1.15%) all the other Asian indices ended in the negative. Jakarta Composite, top loser, down 1.20%.


European indices were trading mostly in the red. US indices too were trading in the negative.


Tata AIA Life refunds Rs2.5 lakh after Moneylife proved contradictory policy terms

After paying annual premium of Rs50,000 for five years, Mr Saxena’s policy was auto surrendered as the fund value was only Rs33,759. Intervention by Moneylife Foundation Insurance Helpline ensured that Tata AIA returned the full premium of five years. Find out how underwriting error was proved

Prakash Saxena (name changed), age 59 years was mis-sold Tata AIG (now called Tata AIA) InvestAssure Gold Whole life ULIP policy in March 2008 for investment purposes. Mr Saxena had paid five premiums with last payment in March 2012. The policy got auto-surrendered in May 2013 as the fund value was lesser than one year of premium of Rs50,000. Tata AIA letter dated 30 May 2013 states that there was non-receipt of premium towards due date of March 2013. Tata AIA sent cheque of Rs33,759 to Mr Saxena as a full and final settlement of all claims and demands under the policy.

Mr Saxena wrote to Moneylife Foundation Insurance Helpline as he had no clue what happened with his policy. He was even willing to pay premium to restart the policy, but the insurer had already mailed him the cheque after closing the policy. Moneylife Foundation Insurance Helpline found that something was inconsistent in the policy terms. The “Schedule of Benefits and Premiums” document clearly states “Number of years premium payable” is five and “Last premium due date” as 30 March 2012 and “Policy term” of 41 years. Mr Saxena had paid five premiums with last payment in March 2012. He did everything as was told by the policy to do. How did the fund value fall below the one premium amount mark? Was it the equity fund option that made the difference?


The answer was actually in the charges which ate over 80% of the annual premium payment. Old ULIPs (pre September 2010) had heavy front loaded charges. Moreover, the mortality charges are steep for older age and it differs with every insurance company. The product which was purchased for investment purposes of Rs50,000 per annum was actually giving insurance cover with only a small amount for investment purposes. It explains why the fund value was only Rs33,759 after five years.


But, did Tata AIA sell the right product to the customer or did they have policy terms that clearly benefitted them? Does Tata AIA benefit from not covering the policyholder who today is nearly 65 years for Rs15 lakh sum assured after enjoying the premium payment for five years? We can’t say. But, the policy terms had contradictions. If “Number of years premium payable” is five and “Last premium due date” is 30 March 2012, why was Tata AIA expecting the policyholder to pay sixth premium on 30 March 2013? If “Number of years premium payable” is five, then why is “Policy term” of 41 years knowing fully well that policy will auto surrender the moment the premium payment is stopped. This is due to the fact that over 80% of the premium payment was going towards the charges. There were clear underwriting errors.


Mr Saxena was under impression that he is buying a whole-life policy and Tata AIA knew that policy will be over after five years. Moneylife Foundation Insurance Helpline highlighted the discrepancies to the insurer. Tata AIA swiftly made a decision to refund the entire premium amount of Rs2.5 lakh to Mr Saxena and they have made the payment. It proves that if there is a genuine case that can be logically proved, the insurance company will have to make amends.

Moneylife has written to Insurance Regulatory and Development Authority (IRDA) stating that the case is not just of mis-selling, but flawed underwriting and hence a toxic product. We requested IRDA to find out from Tata AIA about how many such policies were fraudulently sold and auto-surrendered. Mr Saxena case should not be looked as one-off case, but IRDA help is needed to get justice to all the policyholders who had to suffer.  

Moneylife had written about how one senior citizen relied on the misleading benefit illustration of HDFC Life Young Star product that conveniently ignored the steep mortality charges, which made up for 80% of the premium. The insurance company benefited by keeping the customer in the dark about how much part of the premium really goes towards mortality charges. It is certainly an ingenious way for a life insurance company as they benefit with hefty mortality charges due to higher age of the insured as well as from the expensive Waiver of Premium (WoP) feature. After all the other charges of premium allocation and policy administration charges are deducted, what goes into investment is negligible and hence the corpus after seven years was dismal. HDFC Life child plan sold to senior citizen erodes 96% of investment amount!

We are delighted to report several morale-boosting victories by the Insurance Helpline. Check them here

If you have not yet noticed the Insurance Helpline, here is a link. Pass it on to those who might benefits from it.



Mandira Nayak

4 years ago


I am facing the exact issue with TATA AIG Life insurance.

I stopped paying my premium of 2lakh after three years ( min duration)and now since it 5years I called the customer care asking them for the market value of the invested amount so that I can withdraw it without any charges.

To my surprise,they informed me that my policy has lapsed now and infact out of 6lakhs they had sent me a cheque of 1 lakh 63 thousand. I informed them that I was never informed about this auto surrender and that I never received the cheque with all the details of the units.

My policy was started in 2008 and the last 3rd premium was paid by me in April'2010.

As per my knowledge IRDA passed the rule of the auto surrender charges to avoid this kind of sufferings of the customers in June 2010.

Can anyone please suggest if there is anyway I can try to get my money back from these TATA AIG frauds?

Mandira Nayak
[email protected]

Rama Kant Singh

4 years ago

The Aadhaar enrolment and its URL system is very slow. The enrollment agencies are playing as Govt. Inspectors. Enrollments be exercised on home service system.
The nation has got only 17% Aadhaar, then how it takes as vital place? That is only a faul play with the nation.


4 years ago

Good job done by Money Life


4 years ago

Great Work by Moneylife Team keep it up. I know TATA AIA are very fast at lapsing policies as I had expirienced this a couple of years back. I had HAND DELIVERED a cheque for the halfyearly premium & had taken an acknowledgement from their Parel office. This cheque was not encashed & three months later I received a letter saying that the policy had lapsed due to non payment of premium.As all the documents were available with me I could fight this case out & have the policy revieved before the next premium became due.



In Reply to PREMNATH N KINI 4 years ago

Mr Kini, Write to Moneylife Foundation Insurance Helpline

nilesh prabhu

4 years ago

Great work, just wondering whether we should return back to old raj days. Should all policies bee pre approved by IRDA before been sold ?


4 years ago

Thanks everyone for your support! Yes, IRDA should take it forward. I have written, spoken about it. If they only ask Tata AIA about number of auto surrendered policies and see if the policy terms led to it. Yes, benefit illustration should also reflect the impact of steep mortality charges.

How about simple declaration to the customer that 80% of your premium is going towards charges? It would have cleared everything and Whole life cover is not possible if premium payment term is only 5 years. The insurer took the risk for 5 years and policy was over.

Milind Chitnis

4 years ago

This is great work.

There seems to be major flaw in policy design.

For older clients the benifit illustration itself shold show that the premiums paid in say 5 years will not suffice to give cover for say 15 or 20 years.

Do check what the benifit illustration was showing in this case.

The very fact the company so "generously" and promptly settled the matter is suspicious.

This has to be considered as generaic case and as you have righlty said, ALL policies issued for this (and similiar) products should be checked.

PLEAE take this forward. This could be big.

anil gupta kumar

4 years ago

I am certain that TATA AIA has done the same with many clients. The authority IRDA must ask TATA AIA to furnish details of all such clients whom AUTO surrender cheques have been made out of Invest Assure Gold Whole life Policy. It is because of clauses that are written in tiny letters that fooling of clients is easy.

You have done a marvelous job and returning of 2.5 lacs clearly shows serious flaws.

Mandar Malpure

4 years ago

Well done Raj, keep it up

Dr Pankaj Gupta

4 years ago

kudos to the team , who helped the hapless...


4 years ago

Great work Raj keep it up I'm sure there are other who do not even know about these terms and conditions and may have unknowingly accepted the payments at a steep loss.
What needs to be done is to find out which adviser MIS-SOLD this policy and what action is taken against them, as they are the ones who must have got fat commissions on a product which has such high charges

Bond market is still uncertain on the future of OMOs, says Nomura

The uncertainty on extent of Open Marker Operationss and RBI’s approach toward OMOs should keep supply prone zone of the yield curve (>5-year to 14-year bonds) under pressure,forecasts Nomura

The bond market is still uncertain on the future of OMOs (bond buybacks - open market operations of RBI – Reserve Bank of India), says Nomura Financial Advisory and Securities (India) Private Limited in its First Insights research note. Along with the impact on rupee liquidity from FCNR (foreign currency non-resident) deposits, which questions the extent of the bond buyback requirement, the RBI Governor’s remark on OMOs in a post-policy conference also underlines the uncertainty: “I don’t know whether it should be long bonds or short bonds….we could debate what maturity of bonds we should use and whether we should have a significant effect in the long end and whether we should, those are all issues that are completely open for debate”. The uncertainty on extent of OMOs and RBI’s approach toward OMOs should keep supply prone zone of the yield curve (>5-year to 14-year) under pressure, forecasts Nomura.


Nomura notes that OMOs during the second half of the fiscal year have historically been heavily supportive of India’s bond markets and have kept yield curves flat, despite the issuance pressure in the belly of the curve. However, the current uncertainty on the RBI's approach toward OMOs will keep bonds with a maturity of greater than five years under pressure. As such, Nomura believes that, once market expectations of the terminal repo rate stabilise (the OIS - Overnight Indexed Swaps curve should guide us in this respect), investors can then look to accumulate bonds in shorter tenors (i.e., 3-year to 5-year). However, for bonds with tenors greater than five years, especially 7 years to 14 years (where bond supply is heaviest), the uncertainty (around OMOs) needs to be resolved before the market can stabilise there. As such, only long term investors (who are less prone to mark-to-market moves) should look to accumulate at good absolute levels (e.g., close to 9% on the 10yr benchmark).


Nomura expects that Rs1-1.2 trillion of OMOs in the second half of this fiscal year. However, the uncertainty over the RBI's approach to OMOs will likely dominate price expectations in the near term. Therefore, Nomura suggests that investors stick with the 3-year to 5-year part of the curve, and wait for clarity on the RBI's approach toward OMOs before looking at tenors beyond five years.


Before the bond market can reach a state of equilibrium, there is another source of uncertainty, according to Nomura. The market is still uncertain on the terminal repo rate. Looking at the OIS forward curves, the market is pricing in about an 8% terminal repo rate. However, given the uncertainty and ‘data dependent’ nature of the future outlook, it is likely that the market has not yet reached equilibrium levels in terms of market expectations of the terminal repo rate. In Nomura’s base case, it expects an 8% terminal repo rate before a prolonged pause.


RBI announced its second half borrowing calendar yesterday, with an expected Rs2.35 trillion of issuance. This was consistent with market expectations. There were some concerns among market participants that the second half borrowing calendar would include another Rs500 billion of bond supply to account for 'debt switches' that the RBI is expected to conduct in second half of this fiscal year, concludes the Nomura research note.


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