Nifty may head for 4,425 if it goes below 4,550. A close above 4,685 is needed to hit 4,820
Concerns about the domestic slowdown and the weak Asian markets resulted in the Indian bourses closing lower for the fourth straight day. Today the Nifty crossed the second level of support of 4580, by hitting a low of 4,556, the lowest since 3 November 2009. If the index breaks the level of 4,550, we may see it going down to 4,425. However, for the benchmark to regain some strength, it has to close above 4,685, after which we may see some gains up to 4,820. The National Stock Exchange (NSE) saw a volume of 60.30 crore shares, which is above its 10 day moving average.
Extending its losses into the fourth day, the Indian market opened lower tracking the weak Asian markets in morning trade. A possible downgrade of France’s sovereign rating by Fitch, amid the unending Eurozone debt crisis, also made investors jittery. The Nifty fell 29 points to open trade at 4,623 and the Sensex resumed trade at 15,440, a loss of 51 points over its previous close. The opening figures on both benchmarks were their intraday highs.
All sectoral indices led by banking were in the negative in early trade. The market was range-bound in subsequent trade in the absence of any domestic triggers.
The market fell to its intraday low in post noon trade following reports that research firm CLSA downgraded India to ‘neutral’ from ‘overweight’ in its Asia-Pacific relative-return portfolio. In a note the agency said that India’s problems were self-induced and the government sought to blame on the European crisis for its ills. At the lows, the Nifty touched 4,556 and the Sensex declined to 15,191.
Value-picking after the indices touched the day’s low helped the market paring some of the losses in post-noon trade. However, the market settled in the red for the fourth day in a row. The Nifty erased 39 points to end the day at 4,613 and the Sensex declined 112 points to close at 15,379.
The advance-decline ratio on the NSE was 303:1421.
The broader indices underperformed the Sensex today as the BSE Mid-cap index declined 1.99% and the BSE Small-cap index tanked 2.50%.
The marginal recovery in the post-noon session enabled three of the 13 sectoral indices— BSE Oil & Gas (up 0.96%); BSE Fast Moving Consumer Goods (up 0.61%) and BSE Auto (up 0.22%)—close in the green. The laggards were led by BSE Capital Goods (down 3.48%); BSE Bankex (down 3.08%); BSE Realty (down 2.89%); BSE Power (down 1.60%) and BSE PSU (down 1.59%).
Tata Motors (up 4.44%); Coal India (up 1.89%); Reliance Industries (up 1.78%); Hindustan Unilever (up 1.07%) and ITC (up 0.95%) were the top gainers on the Sensex. The key losers were Larsen & Toubro (down 4.06%); BHEL (down 3.70%); Jindal Steel (down 3.32%); DLF (down 3.05%) and State Bank of India (down 2.91%).
Tata Motors (up 4.41%); Cairn India (up 4.06%); SAIL (up 3.48%); Coal India (up 1.98%) and RIL (up 1.96%) topped the Nifty list. The main losers on the index were Axis Bank (down 5.91%); L&T (down 4.13%); Punjab National Bank (down 4.05%); Reliance Communications (down 3.51%) and Jindal Steel (down 3.49%).
The Asian pack settled lower following reports of the demise of North Korean leader Kim Jong il. The news, which raised concerns about political instability in the region, saw the Seoul Composite plunging as much as 4.4% in intraday trade. Stocks in China fell as data over the weekend revealed that housing prices increased at the slowest pace in a year.
The Shanghai Composite lost 0.30%; the Hang Seng declined 1.18%; the Nikkei 225 fell by 1.26%; the Straits Times tanked 1.55%; the Seoul Composite tumbled 3.43% and the Taiwan Weighted settled 2.24% lower. Bucking the trend, the Jakarta Composite added 0.05% and the KLSE Composite rose 0.14%.
Back home, foreign institutional investors were net sellers of equities totalling Rs220.25 crore on Friday. On the other hand, domestic institutional investors were net buyers of shares amounting to Rs335.30 crore.
Sundaram BNP Paribas Home Finance, the home finance subsidiary of Sundaram Finance, is set to garner home loan disbursement business target of Rs1,800 crore for the fiscal 2011-12. The company has already crossed home loan disbursements of Rs1210 crore in less than three quarters and is confident of achieving its full year target. Sundaram Finance added 0.03% to close at Rs505 on the NSE.
Orchid Chemicals and Pharmaceuticals has received sanction of $100 million (around Rs532 crore) by way of external commercial borrowings (ECBs) from a consortium of Indian banks to redeem its outstanding Foreign Currency Convertible Bonds (FCCBs), which falls due in February 2012. The ECBs and the internal accruals would support the company to redeem the outstanding FCCB of $117 million (Rs622 crore), the company said. The stock plunged 9.26% to settle at Rs122.50 on the NSE.
Cardiac Science Corporation, a subsidiary of medical equipment-maker Opto Circuits is supplying cardiac devices to various football clubs in Australia as part of a campaign to reduce deaths from sudden cardiac arrest under the ‘Defib Your Club, For Life’ campaign. The campaign ‘Defib Your Club, For Life’ was sparked by the on-field death of a young player, Stephen Buckman, in May 2010. Buckman, 19, collapsed from SCA during training. Opto Circuits declined 3.99% to end at Rs187.50 on the NSE.
According to advocate Singh, The policyholder should be educated not to accept the discharge voucher in the first instance itself if he is not satisfied with the amount specified in it or which is being offered. At this instance only he should invoke the arbitration clause to which the company is bound to abide by and they have to agree for arbitration. Here are the excerpts from an interview…
ML: How effective is the insurance Ombudsman in settling claims?
SRS: The insurance Ombudsman is a very informal set-up to resolve disputes for matters below Rs20 lakh. It is a mechanism within the insurance sector itself. According to my experience, I think this is an efficient route for resolving disputes. On an average, matters in the Ombudsman are settled in six months.
ML: Where does the surveyor’s role come into play? Who appoints him and how does he function?
SRS: According to section 64UM of the Insurance Act, 1938, the insurance company has to appoint a surveyor when the claim amount is Rs20,000 and above. This means claims beyond Rs20,000 cannot be settled by the company internally. Relevant IRDA regulations regular the functioning and conduct of the surveyors. The surveyor’s job is to assess the quantum that is claimed for. After assessing the amount he makes the survey-report making suggestions if required as to payability and the amount that should be actually paid taking into consideration the relevant deductions.
Broadly speaking, there are three types of deductions—salvage, depreciation and excess provided under the policy. The deductions are made because as an 'indemnity' implies that one cannot make profit out of the insurance policy.
ML: What if the claimant is not satisfied with the assessed amount? How would this dispute be resolved? To whom should the policy holder go to resolve this quantum dispute?
SRS: Often there are disputes in this regard. The insurance policies always contain an arbitration clause which has two things clearly spelt out,
a) There is no arbitration if the question is of liability.
b) It is only the quantum aspect of the claim that is arbitrable .
If the claimant is not happy with the surveyor’s assessment or the amount offered as full and final settlement, he can invoke the arbitration clause on the dispute regarding quantum and not liability. Though this arbitration clause is available in most of the policies, it is usually not given in medical insurances and motor vehicle claims or in any personal line insurance.
ML: The arbitration should be binding on both the parties. However despite insurance being a contract, there are several instances where the insurers are reluctant to go for arbitration. Why this is so?
SRS: The insurance companies resist arbitration due to the discharge vouchers. The practice has been that the company gives discharge voucher, which clearly mentions that acceptance of the voucher, would be full and final settlement of the claim. If the policyholder accepts the voucher, it becomes a binding agreement under the Contract Act. Therefore, after executing the discharge voucher the policyholder cannot claim for rest of the amount later evidences full and final settlement via-vis discharges any further liability of insurance company.
So, on this ground the companies resist arbitration. In such cases, the recourse left for the policyholder is to file a petition in the high court under section 11(6) of The Arbitration and Conciliation Act, 1996 to seek for appointment appointment of an Arbitral Tribunal.
It is to be noted in a case before the Supreme Court, (National Insurance Company Ltd Vs Bogara (1) SCC 267) Justice RV Raveendran said that such practice of seeking advance discharge voucher and then paying the amount is 'coercive bargaining' or 'undue influence'. Thus many claimants today have filed petitions taking shelter of the aforesaid case-law saying that the discharge voucher was accepted under duress and/or undue influence hence there is no final settlement and the arbitration clause is still open.
Later in 2011, the Supreme Court in a case of Union of India & Ors Vs Master Construction Co 2011 STPL (WEB) 422 SC said that if the voucher is executed and amount accepted then it cannot be further disputed. So there is a mixed view given by the Supreme Court from both the ends.
ML: What the policyholder should do in order to avoid all this litigation?
SRS: The policyholder should be educated not to accept the discharge voucher in the first instance itself if he is not satisfied with the amount specified in it or which is being offered. At this instance he should invoke the arbitration clause to which the company is bound to abide by and they have to agree for arbitration.
ML: Given the fact that roughly 5% to 6% of population in India is insured and yet we have so much litigation in the sector, do we need an appellate tribunal against the Ombudsman order?
SRS: Yes, there should be a two-tier mechanism. This is because, if one wants to appeal the verdict of the Ombudsman today, he has to go back to a civil court or the consumer fora for redressal. These courts/tribunals themselves are flooded with cases. Hence there is an urgent need for an appellate tribunal in the insurance sector. Also, the judgment of the tribunal should be binding on the company and there should be few grounds for appealing the order of the Ombudsman.
(Adv SR Singh is the proprietor of SR Singh & Co, a highly focused and specialized firm in insurance laws and claims. Adv Singh has been one of the prominent and distinguished insurance defense and recovery attorneys and lead counsel in India with over 29 years of experience. He was honorary professor for post graduate degree courses of law and insurance laws Mumbai University. He is also a visiting faculty at the business school of Mumbai Education Trust (MET). He has vast experience in alternate dispute resolution, conciliation and arbitration.)
Britannia's consolidated sales grew by 22% to Rs4,605.16 crore in 2010-11 and its net profit was Rs134.20 crore
Biscuits major Britannia Industries is aiming for higher profitability during the current fiscal as the market remains robust and cost pressures are likely to ease.
"We intend to improve the net operating income, or margin, by another 2%-4% during the current fiscal," Britannia director (Health & Wellness) Anuradha Narasimhan told PTI. In 2010-11, the company's gross and net margins stood at around 21% and 4.3%, respectively, she said.
She attributed the positive outlook to the easing price war in the industry, lower inflationary pressure, healthy demand, focus on value-added and niche products and better cost control. The niche category includes health and wellness products. The adult health food segment is pegged at Rs6,000 crore, including healthy cooking oil.
The company said the baked and non-fried snack market, in which Britannia launched two products under the Nutrichoice brand, is worth about Rs 450 crore at present, but is expected to grow sharply in the next two-three years to Rs 1,000-1,500 crore.
Furthermore, Britannia is ready with more breakfast products for expanding its national footprint.
"We have test-marketed oatmeal in Mumbai and recently in Tamil Nadu. We are also test-marketing Poha Upma in these two markets. In the next three months, we expect to take these products to other parts of the country, possibly in phases," Narasimhan said. The Rs200 crore oats category has witnessed annual growth of around 25%-30%. In the first nine months of this fiscal, Britannia hiked product prices by 6% to accommodate cost pressures, she said.
However, she does not foresee any sharp hike in the next quarter as food inflation is declining. Britannia's consolidated sales grew by 22% to Rs4,605.16 crore in 2010-11 and its net profit was Rs134.20 crore.
In the late afternoon, Britannia was trading at around Rs443 per share on the Bombay Stock Exchange, 2.34% down from the previous close.