Share prices to move sideways: Wednesday Closing Report

Nifty may oscillate between 5,130 and 5,290 with a downward bias

Concerns about the government’s excessive borrowing, as pointed out by the RBI, kept the market lower in the fist session. However, the buoyant European markets lifted the momentum in post-noon trade, resulting in the benchmarks closing in the green for the second straight day. Post noon, European indices helped the Nifty cross the upper range of 5,215, which we gave in our yesterday’s closing report, and close positive. We may see the index moving between 5,130 and 5,290 with a downward bias. The NSE saw a huge volume of 92.42 crore shares.

The market opened lower today as traders resorted to profit booking since the opening bell following recent gains. Also, a mixed trend across Asia on the back of lower-than-expected January manufacturing data from China and a fall in South Korean exports weighed on the sentiments. Back home, the Nifty opened one point lower at 5,198 and the Sensex lost 14 points as it resumed trade at 17,180.

The market was seen moving sideways till noon trade after which concerns raised by the Reserve Bank of India (RBI) over the government’s excessive borrowing pushed the benchmarks to the day’s lows. At the lows, the Nifty fell to 5,159 and the Sensex dropped to 17,062. The advance-decline ratio on the NSE was 1217:481.

However, a positive opening in the European markets resulted in smart recovery, which pushed the indices into positive terrain. The positive trend helped the market hit the day’s high at the fag end of the session. At the highs, the Nifty rose to 5,245 and the Sensex surged to 17,327.

The market closed marginally below those levels and in the positive for the second straight day. At the end of trade, the Nifty gained 36 points to 5,236 and the Sensex added 107 points to finish at 17,301.

The Asian markets, which opened mixed on economic growth concerns, closed mostly higher on support from the European bourses. While Chinese government data showed a rise in manufacturing output last month, the HSBC Manufacturing PMI data disappointed investors.

The Jakarta Composite gained 0.59%; the Nikkei 225 added 0.08%; the Seoul Composite rose 0.18% and the Taiwan Weighted advanced 0.43%. On the other hand, the Shanghai Composite tanked 1.07% and the Hang Seng settled 0.28% lower. KLSE Composite, the Malaysian benchmark was closed for trade today on account of a local holiday. At the time of writing, key European indices were higher by over 1% and the US stock futures were in the green.

Back home, foreign institutional investors were net buyers of shares totalling Rs624.10 crore on Tuesday whereas domestic institutional investors were net sellers of stocks aggregating Rs241.26 crore.

Among the broader indices, the BSE Mid-cap index rose 1.12% and the BSE Small-cap index moved up 1.71%.

The BSE Metal index (up 2.97%) was the top among all sectoral indices today. It was followed by BSE Capital goods (up 2.34%); BSE Auto (up 2.02%); BSE Power (up 1.62%) and BSE Realty (up 1%). The major loss was seen in BSE Consumer durable index which fell 1.31% while indices like BSE FMCG, BSE TECk, BSE IT, BSE PSU fell in the range of  0.03% to  0.15%.

Jindal Steel (up 6.43%); Tata Power (up 6.02%); Hindalco Industries (up 4.23%); Tata Steel (up 4.11%) and Hero MotoCorp (up 3.45%) were the top performers on the Sensex. The losers were led by Coal India (down 2.61%); ICICI Bank (down 1.53%); ONGC (down 1.32%); HDFC (down 1.28%); Bharti Airtel (down 1.04%).
ABG Shipyard has won an order worth Rs500 crore from Shipping Corporation of India (SCI) for construction of six new Bollard Pull AHTS vessels. The price of the vessels is $101.40 million (about Rs500 crore) and it will be delivered in 15 to 25 months from the date of signing the contract, with a gap of two months for each vessel. ABG Shipyard shares jumped 8.23% to close at Rs418.10 on the BSE.

Regency Ceramics has declared lock-out of its factory situated at Yanam in the Union Territory of Puducherry effective today, owing to unprecedented violence that occurred at the factory premises leading to police firing and imposition of Section 144 in the town. This caused extensive damage to the plant and machinery and the death of KC Chandrasekhar, president (operations), Regency Ceramics. According to the preliminary estimates by insurance companies, the loss could be over Rs150 crore. The company has an insurance cover of about Rs500 crore. Regency Ceramics' scrip closed at Rs 3.62 on the BSE, down 4.99%.

Fortis Healthcare, through its unit Fortis Healthcare Singapore Pvt Ltd bought 85% stake in RadLink-Asia Pvt Ltd for 62.9 million Singapore dollar (about Rs245 crore). RadLink has four main business segments -- diagnostic imaging, molecular imaging, cyclotron (radio isotopes manufacturing) and GP clinics. According to Fortis, this transaction will enable it get a strong foothold in the premium diagnostics and molecular imaging segment in one of South East Asia's most attractive markets. Fortis share closed 1.63% higher at Rs 106.30 on the BSE.


Do hospitals overcharge for cashless mediclaim?

Health insurance claims data suggests average cashless amount of Rs45,000 compared to average reimbursement claim amount of Rs25,000. The insurance company trend of going for in-house claims processing is to help in better bargaining with hospitals for procedure rates

Insurance companies are of the view that overpricing by the hospitals has had a significant impact on the average claim amount when the insured goes in for cashless treatment. It is not just the rise by 26% in claim amount (cashless) as against 9% (reimbursement) over two years; the average claim size today for cashless is close to Rs45,000 compared to average reimbursement claim of Rs25,000.

According to Arvind Laddha, chief executive officer, Vantage Insurance Brokers and Risk Advisors, “While indifference on the part of patients, resulting in overtreatment and overcharging by hospitals have been regularly blamed for the higher bills  associated with cashless transactions, it is also a fact that people tend to opt for cashless facility for expensive treatments. In case of hospitalization for inexpensive procedures, the insured may pay upfront and go in for reimbursement.”

According to one insurance brokering company, “Certain hospitals may overcharge, but it cannot be generalised. In some cases it may be better room offered in case of cashless. Most will treat uninsured or insured customer in the same way.”

The results were based on Vantage Insurance Brokers and Risk Advisors study of claims data of 4,90,000 employees of 285 employers across major industries.
The insurance company trend of going for in-house claims processing is to help in better bargaining with hospitals for procedure rates, but the lack of regulation in hospital pricing means that the insurer can influence the hospital rates only to a certain extent.

According to insurance company survey done by the same group, insurers believe that having in-built restrictions in the policy is the most effective measure to control claims (92%). This preference was followed by need to negotiate competitive rates with the hospitals (75%) and having in-house TPA (75%), review timelines for claim intimation and submission (67%). The other claim control measures from insurance companies are claims audit (58%) and restricting the network list of hospitals (58%).

Arvind Laddha adds, “In order to control claim cost, insurance companies realize that it is important to have in-house TPA to properly negotiate rates with hospitals. It is a difficult job with high-end hospitals as they get good business from people who are not insured. Lack of hospital regulator and less number of insured in India makes it difficult for insurance companies to restrict health insurance premium hikes,”

“In many government health insurance schemes, hospitals have agreed on lower rates. Government has to step-in to limit the hospital rates for mediclaim. On the other hand, many hospitals claim to not make big profits and hence cannot reduce rates by great extent.”

According to employer survey, corporate insurance premium increased by 40% in 2010, but only by 22% to 28% in 2011. The group expects health insurance premiums to rise, but the rate of increase would be lower at 15%-20% in the short-term and 10%-15% per cent thereafter.

Arvind Laddha adds, “While the premium (corporate) has certainly increased significantly over the last three years, we believe that it is likely to stabilize gradually going forward. In the long-term, premium increases will be more closely linked to healthcare inflation, morbidity patterns and the features incorporated in the benefits package.”

There is different view to stabilization of premium. According to one insurance broking company, “The premium charged by insurance company depends on many factors. New entrants may try to get business at lower premium with the expectation to get other businesses once they develop relationship. In some cases even established insurance company also grab business for financial need or to show growth on paper. Every insurer has different strategy and premium pricing has to be looked from various angles. Moreover, what happens in corporate business may not reflect in retail premiums as the businesses are different.”

On the retail front too, cashless mediclaim had seen overcharging by hospitals. In a bid to curb the increasing losses incurred by hospitals due to fraudulent and inflated claims, General Insurance Public Sector Association (GIPSA), a group of four government insurance companies had decided to restrict the cashless medical facility only to hospitals that agree to join the Preferred Provider Network (PPN). The rule, which was implemented on 1 July 2010, offers a negotiated rate for 43 treatments that are covered under the cashless policy. The four insurance companies are New India Assurance Company Ltd, United India Insurance Company Ltd, Oriental Insurance Company Ltd and National Insurance Company Ltd. While there has been some success in bringing high-end hospitals like Jaslok and Fortis in the PPN, many of leading hospitals in Mumbai are not on PPN.



Sachin Bhutada

5 years ago

One more master piece article from Raj.
Everyone would agree that cashless mediclaim patients are overcharged by the hospitals.
My friend was admitted to one of the top hospital in Hyderabad after he fell off his bike. He was kept in hospital for 3 days and was handed out a bill of 43000 !. I felt that so ridiculous. It was cashless,so he didnt have to pay.
Also the room type in which my friend was admitted was incorrectly written and overcharged.
But are there any practical ways to stop this nonsense from hospitals?



In Reply to Sachin Bhutada 5 years ago


P M Ravindran

5 years ago

A very timely report. Those who have commented have covered the blanks adequately. But what I want to comment on is about having a regulator. When the government itself has lost all credibility regulators just become rehabilitation centers for the bootlickers of the party in power. Just take the case of medical colleges. The Medical Council of India is supposed to ensure certain mandatory conditions are fulfilled before and after establishing a medical college. For example, the number of professors employed. On more than one occasion it has been reported in the regional media in Kerala that just before the inspection by the MCI team doctors all temporarily transferred to these colleges to pull wool over the eyes of the inspectors. But this is not something that can really fool the inspectors if they decided not to take an ostrich like approach and were not corrupt. But the farce goes on year after year after year.....!


5 years ago

Health services represent, like education, a commodity today. The manner in which prime land in metro cities are allotted to pvt. parties for building hospitals speak volumes about our politicians and their bureaucrat touts/procurers. Hospitals kill patients with impunity-if not physically, then financially.


5 years ago

many good and valid comments. Thanks!


5 years ago

After mediclaim policies have become popular ,many hospitals, doctors charge higher rates for the medical tratement. As hospitalisation is compulsory to get medicalaim ,many treatements whichcan be done at home without hospitalisation also get admitted because of teh need of compulsory hospitalisation. In fact if insurance compnies become practical in allowing certain type of treatment wihtouthospitalisation then the total claims paid by Insurace companies will definitely be reduced. Increased claim ultimately result in increase in premium in subequent years. The real loosers are the honest people who donot claim any thing have to pay higher premium for no fault of theirs.

The cashleess schemes are also misused by hospitals and policyholder both. As the patients have not to pay cash from their pocket they do not mind in charging more. In medicalaim and accident claims honest people pay more premium than necessary for the compensation of dishonest people.


b m agrawal

In Reply to PCChacko 5 years ago

you have made a very correct observation. With the health insurance scheme the hospitals have hiked there rates and try to get the patients admitted and then vicious cycle of tests medicines and other expenses start. Normally if one purchases medicine from market he can avail min 10% rebate.

Vinod Laxmikantrao

5 years ago

Its good article, the major difference between cashless and reimbursement claim is because the General insurance company is giving cashless facillity to Group Policy holders where every thing is covered and on the other hand the people making reimbursement claims are all retail investors and lot of exclusions are imposed.


5 years ago

The trend of cashless mediclaim is being misused by hospitals. Many hospitals ask patients to go for expensive tests which are many a times not related to the case or disease. Moreover at times there is a feeling that they delay the surgeries and treatment so that they can claim huge amounts from insurance companies. Something needs to be done about this to keep a check on misusing the facility and causing an inconvenience to the patient and his family.

This has however become a boon for people who do not have the facility and when the rooms need to be vacant as in such cases the person is then given the right and prompt treatment and is given timely discharge to see to it that the hospital room is vacant for others.

Arun Purohit

5 years ago

Extremely necessary to have a Regulator because every hospital asking insurance details before admission.

Deepak R Khemani

5 years ago

Cashless especially from the PSU companies in MUMBAI at least is near impossible in big hospitals,To an extent everybody is responsible for this mess, first the Insurance Companies and their TPA's(Main Culprit), the hospitals and doctors who run nursing homes, the customers themselves and Finally the toothless IRDA which ADVISES companies not to reject claims on TECHNICAL GROUNDS instead of ordering them to do so and severely punishing those who do not.There are examples of people never getting hospitalized and getting claims on fake bills(In connivance with hospitals and doctors), doctors overcharging just because you have mediclaim cover and the company TPA's who are ready to reject a genuine claim on technicalities without being bothered about what IRDA will do and the poor helpless customer suffers with inflated bills and lower or no claim reimbursement, Sadly until a transparent premium pricing policy and an all India agreement on pricing for different medical procedures is reached the situation can only get worse for the customer with every Insurance Company having its agreement with select hospitals you have to check the list of hospitals empaneled with the company before thinking of which company's mediclaim cover to take!

p v maiya

5 years ago

From some personal experience of assisting an ethically run nursing home, I know their claim used to be delayed because they refused to appoint 'PRO' for smoothening the process of settlement by offering a cut to the TPA officials. They had a lot of unsettled claims which took 6months to finally conclude. I had to recommend discontinuance of cashless facility. Corruption is rampant; the insurance companies will have to go bankrupt or raise the premium.

govind shanbhag

5 years ago

Pradhan Jee - Excellent article but why blame only insurance companies. You go to any physician/surgeon/ hospital/ consulting room first thing the attending doctor and subsequently others ask you instead of asking what is your problem (1) where are you working (2) I think ur employer reimburses entire medical claim (3) do you hold any insurance and if so which is the company and amount of policy (4) are you an NRI ?? After getting all these answers which if appeals to him ask you now tell me what is your problem?



In Reply to govind shanbhag 5 years ago

Quite true. Most of the people connected to health care first want to know if you have Health Policy (irrespective of cashless or reimbursement). Why do they want to know this ? This indicates that they want to know this before they decide on the charge. The best way is to answer in negative, pay upfront and then claim reimbursement, provided one can afford to fork out upfront, and secondly, if you trust your insurer to reimburse without any fuss.

Kommu S V Dakshinamurthy

In Reply to Prakash 5 years ago

If you pay upfront and get treated, Insurance company will trouble you.
If the hospital is ethical, TPA will harass them.
Crooked hospitals will use the patient as a shied and milk Ins cos. Govt will approve its employees to go for corp hospitals, instead of developing Govt hospitals, and pay illegitimate claim to Hospitals.
Finally in all scenarios, cost of insurance will go up for consumers. :-)


In Reply to govind shanbhag 5 years ago

Shanbhag jee, I am not what in the article blamed insurance companies? Please clarify.

Engineering colleges, B-Schools still struggling to fill seats

According to a CRISIL report, despite low penetration of higher education in India and healthy demand for skilled manpower, higher educational institutions are struggling to fill seats and over one-thirds seats in engineering colleges and B-Schools are vacant

Low occupancy has impacted the ability of several lower-rung colleges to sustain operations and, as a result, a number of colleges would either close down or change hands over the next few years, said CRISIL.

Ajay Srinivasan, head of Industry Research, CRISIL Research, said, “Low occupancy rates are making it difficult for many lower-rung colleges to sustain operations. As a result, we expect a number of colleges to face closure or change in ownership over the next few years.”

Despite low penetration of higher education in India and healthy demand for skilled manpower, colleges are struggling to fill seats. As per CRISIL Research estimates, the average occupancy rate declined in 2011-12 to around 67% for engineering colleges and to about 65% for business schools (B-schools). CRISIL analysis indicates a wide variation in occupancy rates across various states and grades. For example, engineering colleges in Andhra Pradesh (AP) and Uttar Pradesh (UP) had an average occupancy of around 60% and 40%, respectively, which is much lower than the all-India average. Tier-4 B-schools, estimated to account for around 36% of the total seats, had an average occupancy of only around 50%.

Occupancy levels are under pressure due to the significant increase in the number of seats across colleges, shortage of skilled faculty, absence of industry link-ups, increasing awareness amongst students about the quality of education imparted by colleges, the ratings agency said.

The number of seats offered by AICTE-approved B-schools has increased almost fourfold to 3.52 lakhs in 2011-12 from 0.94 lakhs in 2006-07, while that for engineering colleges has zoomed to 14.85 lakhs from 5.50 lakhs during the same period. Moreover, there is also a significant concentration of supply, with Andhra Pradesh, Uttar Pradesh, Tamil Nadu, Maharashtra, Karnataka and Madhya Pradesh together accounting for close to 65% of the engineering seats on offer.

Quality of education is another major concern, as an overwhelming percentage of students passing out from lower-rung engineering colleges and business schools (B-Schools) lack skill sets needed to start working, after graduating, without extensive training. A number of corporates have actually started in-house courses to train students for the exact job roles.

In fact, CRISIL’s education grading programme for B-schools is aimed at bridging the gap between existing education quality and corporate expectations. “There is an urgent need for education institutes to re-establish their quality paradigm with the corporate sector. Our grading centrally factors corporate feedback, apart from it being based on parameters that are most relevant to the corporate sector, which include industry interaction, entrepreneurship, and practical exposure,” said Akash Deep Jyoti, Head of CRISIL Ratings,

Supply-demand factors are not the only troubles for private engineering colleges. Political decision-making is also a source of viability questions in Andhra Pradesh. According to a newspaper report as many as 75 private engineering colleges from Andhra Pradesh have stopped admissions for the current academic year and have put themselves up for sale in view of the state government’s decision to stagger the tuition fee reimbursement programme. As per the new guidelines, students with 75% attendance, 50% marks in the first year of plus-two, and an income of below Rs1 lakh a year, are eligible for reimbursement of tuition fees in Andhra Pradesh.

There are reports that some political leaders were busy negotiating with the troubled colleges for purchasing them at a cheaper rate. Recently, three such engineering colleges in Telangana region were sold to relatives of a politician, said a report.



Anil Agashe

5 years ago

Very true. As far as Management is concerned the quality has deteriorated even in good business schools. Proliferation of business schools is one major cause. Quality is a word that has disappeared completely and has been replaced by Placements at all costs. The tragedy is corporate India is hiring bad students at a very high package.

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