Share prices rally against odds: Wednesday Closing Report

Nifty will target 5,130 and above. Support is at 5,060

The market closed 2.50% higher on support from IT and technology stocks following better-than-expected second quarter earnings from Infosys. Weak industrial data for August was ignored by investors as the market kept the momentum going, barring minor hiccups in noon trade. The Nifty made a huge move today to reach a zone which may see the index moving upwards. However, for this to be sustained, the index will have to keep itself above 5,060 and should try to close above 5,130. The National Stock Exchange (NSE) saw a volume of 56.17 crore shares, which was above its 10-day moving average.

The market opened higher on better-than-expected second quarter earnings report from IT bellwether Infosys, which was announced this morning. The Nifty opened above its psychological level of 5,000 at 5,020, a gain of 46 points, and the Sensex rose 124 points to resume trade at 16,660. IT, technology, metal and banking stocks supported early gains.

The market continued to accrue additional gains in the morning session, brushing aside a fall in the industrial output numbers for August. However, profit-booking at higher levels and a weak opening of the European markets following the Slovak parliament’s failure to approve the expansion of the European Financial Stability Facility resulted in the market paring some of its gains. The market fell to its lows at around 1.00pm with the Nifty retracing itself to 4,998 and the Sensex falling to 16,608.

All was not lost as buying in select stocks and the European indices recovering from the early hiccups pushed the market to a higher trajectory once more. The market hit its intraday high towards the end of trade with the Nifty scaling 5,110 and the Sensex touching 16,977. The market closed near those levels with the Nifty closing with a gain of 125 points at 5,099 and the Sensex surging 422 points to settle at 16,958.

The advance-decline ratio on the NSE was 1195:484.

Among the broader indices, the BSE Mid-cap index gained 1.40% and the BSE Small-cap index rose 1.18%.

All sectoral indices settled in the positive. The top gainers were BSE IT (up 5.21%), BSE TECk (up 3.83%), BSE Bankex (up 3.38%), BSE Realty (up 2.97%) and BSE Capital Goods (up 2.44%).

Infosys (up 6.83%) topped the Sensex list on posting better-than-expected second quarter results. It was followed by Jindal Steel (up 6.08%), State Bank of India (up 6.07%), TCS (up 3.66%) and Sterlite Industries (up 3.63%). Coal India (down 1.71%), Tata Power (down 1.56%) and Bharti Airtel (down 0.20%) were the losers on the index.

The Nifty gainers were led by Infosys (up 7.05%), SBI (up 6.54%), Tata Motors (up 5.23%), Jindal Steel (up 4.62%) and Kotak Bank (up 4.50%). The major losers were Coal India (down 2.53%), Tata Power (down 1.41%), BPCL (down 0.96%), Bharti Airtel (down 0.76%) and Ranbaxy (down 0.45%).

The Asian pack ended mostly higher led by China, following reports that the country’s sovereign wealth fund has been supporting banking shares, which have seen a sharp fall in their values.

The Shanghai Composite jumped 3.04%; the Hang Seng rose 1.04%; the Jakarta Composite climbed 2.95%; the KLSE Composite gained 1.19%; the Straits Times advanced 1.66% and the Seoul Composite inched up 0.81%. Bucking the trend, the Nikkei 225 lost 0.40% and the Taiwan Weighted shed 0.22%.

Back home, foreign institutional investors were net buyers of stocks worth Rs114.15 crore on Tuesday. Similarly, domestic institutional investors pumped in Rs108.17 crore into equities.

Hinduja flagship company Ashok Leyland is set to increase the prices of its commercial vehicles across models by 1% within a month. While the company did not specify the reasons for the proposed price hike, automobile companies have in the recent past been faced with high raw material and input costs. Ashok Leyland gained 1.02% to close at Rs24.85 on the NSE.

Private sector shipbuilder Pipavav Defence & Offshore Engineering (formerly Pipavav Shipyard) is betting big on exports to geographies like Latin America, Indonesia and Africa. Out of the total order book of around $1.5 billion, $710 million comprise exports as of now for the company. The stock fell 1.13% to close at Rs83.20 on the NSE.

Kale Consultants, a leading solutions provider to the airline and travel industry has unveiled a unique SIS Compliance Package for airlines. The package is a first-of-its-kind with standalone solutions; REVERA Interline billing solutions for passenger interline billing and FINESSE MBS for miscellaneous billing. This package will help airlines migrate to the SIS enabled world with ease. The stock settled 2.77% higher at Rs79.90 on the NSE.




Equity mutual funds rake it in despite bearish mood

Equity mutual funds record Rs1,440 crore in September inflows after a great August, thanks to the success of systematic investment plans

Much to the relief of fund managers, the equity mutual fund schemes have seen net inflows for the second successive month. According to statistics available from industry body Association of Mutual Funds in India (AMFI), pure equity funds witnessed a net inflow of Rs1,440 crore during the month. As compared to the last month, which saw equity inflows of Rs1,986 crore, September inflows registered a 27% drop. Almost 98% of this amount was from existing schemes. This has taken the overall net inflows in FY12 to Rs2,610 crore, against a net outflow of a massive Rs15,361 crore during the same period last year.

This large positive inflow belies the mood prevailing among investors and the marketplace. The market is in a bearish mode (the Sensex has fallen by 21% from its all-time high in November 2010 at 21,000 to around 17,000 now).
Still, in such a scenario, a lot of investment is happening through mutual funds. This shows investor maturity and the awareness of the concept of systematic investment. Earlier, money used to flow in only in a rising market. But it could well be that the idea of getting wealthy through systematic investment plans (SIPs) has started penetrating the minds of investors.

Despite having a net equity inflow of Rs2,557 crore for the quarter ended September 2011, the average assets under management (AUM) fell by 4% to Rs712,742 crore for the quarter ended September 2011, as compared with Rs743,502 crore for the quarter ended June 2011. As per a CRISIL report, fall in the average AUM can be attributed to a steep 13% fall in the domestic equity markets (S&P CNX Nifty). Further, higher redemption by corporates on account of higher advance tax outflow during the July-September quarter, as against the previous quarter, also resulted in the decline.

The bulk of equity assets are coming into well-performing funds. According to a business newspaper, HDFC Mutual Fund, one of the best-performing fund houses, receives Rs600 crore by way of SIP money every month.

The breakup for various funds for September 2011, available from AMFI, indicates that there was an outflow of Rs15,263 crore from income funds; balanced funds saw a net inflow of Rs99 crore; liquid/money market funds had an outflow of Rs41,078 crore; gilt funds also had an outflow of Rs117 crore; gold ETF (exchange-traded) funds received a net inflow of Rs988 crore; whereas other ETFs saw an outflow of Rs186 crore, and fund of funds (FoFs) investing overseas had an outflow of Rs56 crore.

One of the reasons for the net equity inflows consecutively in the last two months may be because mutual fund houses are leaving no stone unturned to keep distributors in good humour. Asset Management Companies (AMCs) are paying a higher upfront fee to distribution subsidiaries of foreign & private banks nowadays to drive ‘exclusive sales’ of their schemes, mainly equity schemes. This commission is in addition to the upfront and annual trail fees that mutual funds pay distributors for selling their schemes.




6 years ago

The SIP book size of the industry is estimated to be Rs.1300 crore per month, as of September 30th. This is as per SEBI. In August, Valueresearch estimated the SIP book size to be Rs.1500 crore per month.

It is unlikely that HDFC may have a 46% market share of SIP book Size. The market grapevine is that HDFC & Reliance put together may have a market share of 45%, the rest shared by all the other AMCs.

In the recent Reliance Capital AGM, I vaguely recollect their CEO saying that they have a corpus commitment of around Rs.18,000 crore for next 5 years through their SIP book. This works out to Rs.300 crore per month. We need to remember, HDFC was relatively a late entrant when compared to Reliance on SIP focus.

If one adds up what each AMC says as their SIP book size, the amount crosses well above Rs.3000 crore which is misleadingļŠ

Would it be possible for Moneylife to obtain the SIP breakup across fund houses?

Bharti AXA Life Triple Health Insurance plan: How does it measure up?

Bharti AXA’s plan offers cover of a maximum of three times the sum assured under the policy, while covering three critical illnesses. The premium is waived by the insurance company after payment for the first critical illness. But it comes with some riders

Bharti AXA Life Insurance has launched its ‘triple benefit’ critical illness plan, called the Triple Health Insurance plan. This plan covers 13 critical illnesses that have been classified into three groups. The policy pays the sum assured (SA) on the diagnosis of one of the illnesses. The policy continues and can pay for additional critical illnesses as long as they are in other groups. The maximum coverage is for three critical illnesses.

As with all the insurance plans being offered by various insurance industry players, this one also has its advantages and shortcomings. Here are few of the advantages:

  • The plan offers cover of a maximum of three times the SA under the policy. This is a distinctive feature of the product, as other critical illness policies end, once the claim is paid for a single critical illness.
  •  Future premium payable by the policyholder is waived. The policy continues as the policyholder is still covered for illnesses under the remaining two groups.
  • Premium rates are guaranteed for the first three policy years.

However, the plan does suffer from a few shortcomings.

  •  The product will not pay a claim if the diagnosed critical illness falls in the group under which the policy has already paid out. Group ‘A’ includes conditions like heart attack, coronary artery bypass, kidney or heart transplants, kidney failure and paralysis. Group ‘B’ has coma, multiple sclerosis, liver or lung transplants. Group C covers cancer, benign brain tumours and bone marrow transplants.
  •  There has to be a gap of 365 days between the diagnoses of two illnesses for the subsequent claims to be admissible.
  •  The product is available for customers with no pre-existing illnesses at the time of application.
  •  The total policy and premium paying term is 15 years—which is unlike most critical illness products, which have lifelong renewal.


There will be a waiting period of 90 days from the policy’s inception. The policyholder needs to survive for 30 days after the diagnosis of the critical illness to claim policy benefit. This is standard in critical illness products.
The minimum and maximum ages at entry are 18 and 50, respectively, with the upper age limit at maturity being 65 years. You have to buy a cover of at least Rs2 lakh, while the highest cover available under the policy is Rs30 lakh.

The product offers option of return of premium at increased premium. It gives survival benefit and a death benefit in case you have made no claims during the term. The policyholder gets 15 times the first year premium on survival. In case of death, the nominee gets a sum equal to the first-year premium multiplied by the number of years the policy has completed.


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