We may see one or two days of recovery if today’s lows hold
Today, after the market opened in the negative, the indices witnessed range-bound movement until noon. There was steep decline, resulting in the benchmarks hitting their intraday lows, the lowest since early November 2009. The indices made a strong recovery from their day’s lows but closed in the red. From here we may see a short term recovery if today’s lows hold. The National Stock Exchange (NSE) saw a volume of 67.14 crore shares.
The market opened lower today, wiping all the gains that were accrued yesterday in come-back rally, on negative cues. Uncertainty in Europe and a lower-than-expected US GDP growth in the September quarter pulled down the Asian pack, and India was no exception. The Nifty opened at 4,780, down 32 points from its previous close, and the Sensex declined 95 to begin trade at 15,970. The opening figures on both benchmarks were also their intraday highs.
All sectoral gauges were in the red as the fall increased as trade progressed. Metal, tech and banking counters witnessed heavy selling in early trade. Reports of China’s November factory output plunging to a 32-month low also weighed on investor sentiments.
Finance minister Pranab Mukherjee, while responding to queries in Parliament today, attributed the stock market crash to withdrawal of funds by foreign investors and depreciation of the rupee.
The market touched the day’s low in noon trade as the European markets opened lower. At the intraday low, the Nifty fell by 171 points to 4,641 and the Sensex plunged 587 points to 15,479.
The advance-decline ratio on the NSE was 357:1342.
Among the broader indices, the BSE Mid-cap index declined 2.05% and the BSE Small-cap index fell by 1.72%.
Barring the BSE Consumer Durables index (up 0.49%), all other sectoral gauges closed lower. The top losers were BSE Capital Goods (down 3.04%); BSE TECk (down 2.65%); BSE IT (down 2.48%); BSE Oil & Gas (down 2.41%) and BSE Bankex (down .40%).
NTPC (up 0.58%) was the sole gainer on the Sensex in today’s market mayhem. The laggards were led by Jaiprakash Associates (down 5.05%); HDFC Bank (down 3.85%); Bharti Airtel (down 3.70%); BHEL (down 3.58%) and Wipro (down 3.17%).
NTPC (up 1%); Reliance Communications (up 0.71%); Bajaj Auto (up 0.43%) and Hindustan Unilever (up 0.03%) were the gainers on the Nifty. BPCL (down 5.34%); JP Associates (down 5.13%): HDFC Bank (down 4.52%); IDFC (down 4.36%) and Ranbaxy (down 4.21%) were the major losers on the index.
The absence of any positive trigger kept the indices range-bound in the negative terrain in the post-noon session. The Nifty declined 106 points to 4,706 and the Sensex closed the session at 45,700, a cut of 365 points.
Markets in Asia closed lower on news that China’s factory output in November plunged to a 32-month low of 48, down from a final reading of 51 in October. This apart, the decline in US GDP growth in the September quarter re-ignited fresh concerns about the slowdown in the global economy.
The Shanghai Composite declined 0.73%; the Hang Seng tanked 2.12%; the Jakarta Composite fell 1.30%; the KLSE Composite slipped 0.34%; the Straits Times decreased by 1.50%; the Seoul Composite settled 2.36% and the Taiwan Weighted tumbled 2.77%.
Back home, foreign institutional investors were net sellers of stock totalling Rs952.68 crore on Tuesday. On the other hand, domestic institutional investors were net buyers of shares worth Rs1,065.51 crore.
Suzlon Energy subsidiary REpower Systems SE has inked a deal with EverPower Wind Holdings to deliver 68 wind turbines for the Twin Ridges project in Pennsylvania, USA. The wind farm, which is scheduled for commissioning in the fiscal 12-13, will generate total output of nearly 140 MW, providing enough clean energy to power over 38,000 homes. The scrip rose 0.23% to close trade at Rs22.10 on the NSE.
Heavy vehicles major Ashok Leyland and US-based agriculture machinery maker John Deere have announced entry into the Indian construction equipment business with the launch of 435 Backhoe Loader. The earth mover is the first out of the 50:50 joint venture between the two companies, almost three years after they forged the partnership. Ashok Leyland settled flat at Rs24.85 on the NSE today.
3i Infotech has entered into strategic alliance with the Indian arm of Smartesting, a leading software provider for model-based test design solutions. With this partnership, 3i Infotech’s Independent Testing and Compliance Business (ITCB) will not only integrate the Smartesting solution in its test environment but also offer this as part of its testing solution to all its customers. The stock tumbled 5.29% to close at Rs17.90 on the NSE.
Experian’s Hunter service enables the early detection of potentially fraudulent applications and helps identify fraud rings
Experian, the global information services company, today announced that HDFC Bank has selected Experian National Hunter, an application fraud prevention service to prevent costly application frauds. Now, India’s three private sector banks which include Axis Bank and ICICI Bank are all using Experian Hunter to prevent loan application frauds.
Experian’s Hunter service enables the early detection of potentially fraudulent applications and helps identify fraud rings. The most effective strategy is to prevent the fraud at the point of application and Hunter achieves this without affecting customer service levels and turnaround times.
Its business as usual even after two months of the IRDA circular which asked insurers to not reject claims on technical grounds. With no warning or penalty for specific insurers, will the IRDA circular be taken seriously?
Two months ago the Insurance Regulatory and Development Authority (IRDA) issued a circular to life and non-life companies asking them not to reject claims on technical grounds like a delay in filing. Some insurers including United India Insurance were rejecting claims mechanically based on delay in hospitalisation intimation and claims filing. Claims continue to get rejected even after IRDA circular.
For starters, there is no warning or penalty for insurance company to reject claims mechanically on grounds of late filing. The IRDA circular is not an ‘order’ directing any particular insurance company to strictly adhere to the claims rejection on technical grounds. By not naming the errant insurers, the companies can feign ignorance of the snag happening under their nose.
According to industry sources, “The end result is that there is no directive given by insurers like United India to its regional/division offices or third-party administrators (TPA) to take necessary remedial action. There is no change at the ground level which makes the IRDA circular completely ineffective.”
Another source confirms that there is no relaxation on the strict deadlines and condone requests will be rejected in most cases.
United India has strict deadline of hospitalisation intimation within 24 hours and claims submission with seven days of hospital discharge. Minor delay results in claims rejection and condone request is usually refused. Moneylife has examples of some claims rejection even when the strict deadlines were met. Moneylife has done cover story (3 November 2011) on ‘Insurance Claim Rejected’
Interestingly, United India is the only government-owned general insurer which has shown profits and has aggressive plans for business growth. The company’s CMD was quoted saying they have premium target of Rs8,000 crore this year at 25% growth rate in business. They plan to bring down underwriting losses—premium less claims outgo—to Rs900 crore from last year’s figure of Rs1,760 crore. He adds, “Better underwriting, proper pricing of group policies, tightening of claims procedures in respect of health insurance and audit of claims settling agents resulted in reduction in health claims outgo.” The ‘tightening of claims procedure’ surely includes claims mechanically rejected on flimsy grounds of any minor delay (or no delay in some cases) in hospitalisation intimation or claims submission. It did not matter that the company happily collected premiums from same customer for decades.
According to one Moneylife reader, “United India has instructed its offices to send soft data, to the TPAs, of health insurance renewals once a month only, usually on the last day of the month. As a result when an insured is admitted to a hospital a week or two after his policy has been renewed and he contacts the TPA, he is told that as per their records his policy has not been renewed and therefore they are unable to register his claim even though he had called them within the mandatory 24-hour deadline! As a result he is also denied cashless facility and has to go in for reimbursement which again will be denied on the grounds that the claim was not reported within 24 hours!”
He adds, “Another ploy being perpetrated on the policy holders is the raising of queries pertaining to the claim by the TPA wherein it is stated that if the insured does not respond within 15 days the file will be closed. This communication in most cases is not posted to the policy holder whereas a copy of the same is kept in the insured claim file. In cases where it has been despatched the letter usually arrives just a day or two before the deadline giving the insured no chance to reply in time. Once the file has been closed, only a letter from the regional manager will be accepted to reopen the file. The branch (division) mangers have no say on this issue! But if an insured has the tenacity to fight his claim will no doubt be settled. United India is fully aware that a lot of policy holders will not go that far and will simply bemoan their fate and this is United India's way of trying to keep claim ratios within tolerable limits! Policyholders are warned!”
There is no initiative from IRDA to monitor the ground reality of mechanical claims rejection. Will IRDA get the statistics on claims rejection and reasons given by insured for delay? Will it do an analysis on how many requests to condone delay were approved and rejected? Does IRDA intend that insurer follow its advice from the date of circular? What about the claims which are already rejected and condone requested? What about claims which are already rejected, condone rejected and cases closed? The mechanical rejection has been going for long time and the relief has to be applicable for past cases, too. Will IRDA review such cases and give justice?
IRDA needs to check if the insurance company and TPA have a 24X7 system in place to receive intimation and give confirmation number. They should insist on such system being 24X7 customer care and not force the insured to send fax or email within 24 hours of hospitalization. Fax and email for hospitalisation intimation are disputed as being not received or not legible. It is a perfect excuse for claims rejection.
Also read, IRDA asks insurers not to reject health insurance on a routine basis, but don’t pin much hope on this directive