Sensex, Nifty wait for fresh signals: Tuesday Closing Report

Market to closely watch the outcome of German court’s decision on the Eurozone bailout fund and the FOMC meeting 

The domestic market, which was in the negative in the entire morning session, picked momentum in the second half and settled higher on buying in blue chips. Today the index managed to make a higher high, but made a lower low and closed near the day’s high. This is a bullish close but the Nifty is now is waiting for fresh global cues to set its further direction. Smart traders would wait and watch. The National Stock Exchange (NSE) saw a higher volume of 51.96 crore shares and the advance decline ratio was 964:775. 
The market opened lower tracking weak global cues as the US markets closed in the negative on cautiousness ahead of the two-day FOMC meeting, which gets underway on Wednesday. Markets across Asia were subdued in morning trade today ahead of a crucial German Constitutional court decision on the Eurozone bailout fund. The Nifty opened 27 points lower at 5,336 and the Sensex started off at 17,712, down 55 points from its previous close. 
The indices fell to their intraday lows in initial trade with the Nifty touching 5,332 and the Sensex going back to 17,677. Select buying saw the indices gaining strength gradually in the morning session and emerging into the positive in noon trade.
An increase in diesel, cooking gas and kerosene price is ‘unavoidable’, oil minister S Jaipal Reddy said on Tuesday but indicated that the hike may not be decided by the Cabinet Committee on Political Affairs (CCPA) at its meeting later in the evening.
“There is a meeting of the CCPA (this evening). This item (increase in diesel and cooking fuel) is not listed,” he told reporters after meeting Finance Minister P Chidambaram. “I am not sure if the item will be taken up at all today” he added.
Gains in oil & gas, healthcare and IT stocks supported the upmove in the second half of trade, despite the key European benchmarks trading lower. 
Meanwhile, the Goa government on Monday issued a notification asking all the 90 mines to suspend operations with immediate effect. The state Mines and Geology Department issued this notification directing the mines to stop their operations. Chief minister Manohar Parrikar said that the mines would not be allowed to operate, if they were found to be carrying out work without the necessary permissions. The mine owners have been asked to submit their documents before they could re-start operations.
The market continued to gain strength in post-noon trade and hit its intraday high at in the last half hour. At the high the Nifty rose to 5,393 and the Sensex climbed to 17,868.
The benchmarks pared some gains and settled off the highs. The Nifty closed 27 points up at 5,390 and the Sensex finished the session at 17,853, a gain of 86 points.
Among the broader indices, the BSE Mid-cap index rose 0.27% and the BSE Small-cap index gained 0.58%.
The top sectoral gainers were BSE Realty (up 0.94%); BSE IT (up 0.88%); BSE Power (up 0.81%); BSE TECk (up 0.76%) and Bankex (up 0.58%). BSE Metal (down 1.48%) and BSE Auto (down 0.05%) were the only losers.
Seventeen of the 30 stocks on the Sensex closed higher. The top five stocks on the index were HDFC (up 2.49%); NTPC (up 1.81%); GAIL India (up 1.66%); BHEL and TCS (up 1.41% each). The key losers were Sterlite Industries (down 4.43%); Jindal Steel (down 3.13%); Hero MotoCorp (down 1%); Tata Steel (down 0.79%) and Hindustan Unilever (down 0.58%).
The top two A Group gainers on the BSE were—Muthoot Finance (up 10.57%) and Opto Circuits (up 7.75%). 
The top two A Group losers on the BSE were—Sesa Goa (down 5.81%) and United Breweries (down 4.77%).
The top two B Group gainers on the BSE were—Wanbury (up 20%) and Sree Raval Histreng (up 20%).
The top two B Group losers on the BSE were—First Winner Industries (down 19.91%) and Trimurthi Drugs & Pharmaceuticals (down 16.01%).
Out of the 50 stocks listed on the Nifty, 30 stocks settled in the positive. Siemens (up 3.80%); IDFC (up 3.21%); BPCL (up 2.47%); HDFC (up 2.27%) and Kotak Mahindra Bank (up 2.21%) were the top gainers on the benchmark. The main laggards were Sesa Goa (down 5.95%); Sterlite Ind (down 3.81%); Jindal Steel (down 2.98%); Hero MotoCorp (down 1.51%) and Power Grid Corporation (down 0.98%). 
Markets in Asia closed mostly lower as investors await a German court ruling on the Eurozone bailout fund and on fresh concerns emanated from Spain and Greece on the implementation of austerity measures. 
The Shanghai Composite declined 0.67%; the Jakarta Composite fell 0.13%; the Nikkei 225 dropped 0.70% and the Seoul Composite slipped 0.24%. On the other hand, the Hang Seng rose 0.15%; the Straits Times gained 0.26% and the Taiwan Weighted added 0.035.
At the time of writing, the key European indices were trading lower while the US stocks futures were marginally higher.
Back home, foreign institutional investors were net buyers of stocks totalling Rs692.73 crore on Monday. On the other hand, domestic institutional investors were net sellers of equities aggregating Rs318.32 crore.
Infrastructure major Hindustan Construction Company (HCC) today said it has bagged two major contracts worth Rs1,534 crore in various business segments including one in Jammu & Kashmir for construction of a tunnel. The stock gained 2.54% to settle at Rs16.15 on the NSE.
Pharma major Panacea Biotec today entered into a strategic alliance with Osmotica Pharmaceutical to develop and market products in various global markets, including the US. Under the collaboration, Panacea will lead product identification, research, development and manufacturing while US-based Osmotica will be responsible for product registration, legal matters, sales and distribution. The stock zoomed 20% to settle at Rs108 on the NSE.
Godrej Properties today said it would invest up to Rs600 crore in developing a residential complex in Gurgaon over the next five years. The project—Godrej Summit—will be developed in partnership with Zara Sanya under an area sharing agreement, in which GPL will hold 65% stake. The stock gained 2.05% to settle at Rs534.55 on the NSE.



Bharti AXA Life Secure Savings Plan: Is guaranteed 10% additions a correct representation?

Bharti AXA Life’s new plan provides guaranteed additions of up to 10% of each year’s cumulative base premium paid. Find out how it translates to returns of less than 4.5% p.a. for a 20-year policy. If IRDA really wants to bring transparency, it needs to start with this product

Bharti AXA Life Secure Savings Plan offers guaranteed additions of up to 10% of each year’s cumulative base premium paid along with life cover to the customers. While ‘10%’ may give a perception of good returns, it is far from reality. Does a layman understand that the actual returns in this product will be less than 4.5% p.a. for 20-year policy? An average customer simply cannot do calculations of real returns, which is dismal in this case. The insurance company is right on purported guaranteed additions, but Insurance Regulatory and Development Authority (IRDA) needs to usher in simplicity for a layman.
The press release quotes Bharti AXA Life, MD and CEO, Sandeep Ghosh, saying,
“Given the volatile investment scenario today, consumers are looking for safe investment opportunities that provide guaranteed returns. The new plan provides guaranteed additions of up to 10% of each year's cumulative base premium paid.” The real returns are never mentioned in the brochure or any other document. IRDA should make the insurance companies highlight the expected returns, especially as this product only offers guaranteed additions without any non-guaranteed additions.
A policyholder of age 35, paying annual premium of Rs20,000, will get a Sum Assured (SA) of Rs235,073, assuming good health. The guaranteed addition percentage of 10% of each year’s cumulative base premium will be Rs420,000. Maturity benefit will be SA + Rs4,20,000 or Rs6,55,073. The Internal Rate of Return (IRR) will be just 4.49%. For a higher age, the IRR will reduce as the premium will increase for the same SA, for covering the higher life risk. Moreover, the guaranteed additions can be less than 10% depending on premium and policy term as shown in the table.
The insurance cover is higher of SA or 105% of premiums paid along with accrued guaranteed additions is payable on the death of the life insured. The maturity benefit is SA along with guaranteed additions is payable at maturity of the policy. The maximum maturity age is 70 years. 
The minimum annual premium is Rs18,000 for a 15-year policy and Rs12,000 for 20-year policy. There is discount of 3% and 5% for policy term of 15 and 20 years respectively for premium of Rs1 lakh or above. The product comes with optional riders of Accidental Death and Disability benefit, Critical Illness benefit and Waiver of Premium. 




2 years ago

"Bajaj Allianz Save Assure" - a traditional endowment plan that not only secures you and your family but also guarantees 115% of your sum assured. Living worry free is now guaranteed.*

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4 years ago

Life Insurance is 65% confusion & 35% commission.Duniya Jukti hai Jukanewala Chaiye.It is now free for all in Life Insurance sector.

45% of Indians don’t expect economic outlook to improve, finds survey

Public confidence in India’s direction and future economic growth has declined significantly compared with last year says the Pew Research Center’s Global Attitudes Project survey

In a world where the Americans, the Europeans and even the Chinese have reason to worry about their economies, it is the Indians who have lost the greatest faith in their economic fortunes, says a research report.
Pew Research Center’s Global Attitudes Project, in a public opinion study, said the economic euphoria in India over the last few years, inspired by the country’s seemingly inevitable march toward double-digit growth, has suddenly soured. Although still relatively upbeat compared with many other countries, the Indian public’s confidence in their country’s direction and future economic growth has declined significantly compared with just a year ago, it added.
According to the study, today Indians are mixed in their assessment of national economy. “...49% say the economy is in good shape, while 45% describe the economy as bad. A year ago opinion was more upbeat, with a 56% majority saying the national economy was doing well compared with 43% who disagreed.”
The survey said, the trend line in India conveys a more troubling story. Just 38% of Indians are satisfied with the way things are going in the country—a 13 percentage point decline since last year. This is among the largest drops in national contentment across the countries surveyed in 2011 and 2012.
Meanwhile, the proportion of Indians who think current economic conditions are good is down seven percentage points from 2011. And only 45% of Indians think their economy will improve over the next 12 months. Such optimism has declined 15 points since 2011, again the largest falloff among the 17 nations with comparable data, it added.
“A year ago, Indians’ economic mood trailed that in China, bested that in Europe and the United States, and was comparable to that in Brazil. Today, Indians’ evaluation of their current national economic situation trails that in China by 34 percentage points and Brazil by 16 points. And Indian optimism about the next year lags behind that in Brazil by 39 points and China by 38 points. Indian satisfaction with the direction of the country is descending toward that in Europe and the United States and hope for the future has been surpassed by that in America," the survey pointed out.
Contrary to their view of the health and future of the national economy, nearly two-in-three Indians (64%) say their personal finances are good, the study said adding that this level of personal contentment is higher than in 14 of the other 20 countries surveyed in 2012.
However, according to the study, Indians are not terribly optimistic about their children’s economic prospects. About two-thirds (66%) think it will be difficult for their kids to get a better job or become wealthier than the current generation. Such pessimism is relative, however. Among the 21 nations surveyed, people in 17 countries are even more glum about their children’s futures, it said.
Not all Indians are downbeat. By a margin of 25 percentage points, higher-income Indians are more satisfied than lower-income Indians with their personal economic situation. Richer Indians are more likely than lower-income Indians, by 13 points, to say they are better off than they were five years ago. And by nine points, they are more likely to say that their children can do better financially than themselves. 
These differences by income group are generally greater in India than those found in Brazil, China or Turkey, the three other emerging market economies surveyed. And they exist at a time when roughly seven-in-ten (72%) Indians say the gap between the rich and the poor is a very big national problem, the Pew Research Center’s Global Attitudes Project survey said. 


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