Institutional investors are not enthusiastic over current market valuations
The market sentiment was subdued today, dragging the indices lower. The Sensex ended at 17,368, down 172 points (1%) and the Nifty ended at 5,222, down 55 points (1%). The market started the day with a deep plunge. It rebounded from there and traded at a low range till the morning session. However, it again took a dip and touched the intraday low during the afternoon session.
Asian stocks declined on Monday on China’s announcement on 2nd May, raising the proportion of deposits that lenders must keep in reserve with the central bank. Key benchmark indices in Hong Kong, South Korea, Indonesia, Singapore and Taiwan fell by 0.36% to 1.41%. The stock markets in China and Japan were closed for holidays. US stocks tumbled on Friday, (30th April) as news of a criminal probe into US investment bank Goldman Sachs dampened the sentiment of investors who are already worried about the prospects of heavy banking regulation. The Dow fell 158.71 points (1.4%) to 11,008. The S&P 500 lost 20 points, (1.6%) to 1,186. The Nasdaq dropped 50 points, (2%) to 2,461. Maruti Suzuki India's (up 0.2%) total sales rose almost 30% to 93,058 units in April 2010 over April 2009. Domestic sales rose 23.4% to 80,034 units. China has raised the lenders' reserve requirement ratio by 50 basis points, effective 10th May, its third increase of that magnitude this year. That will take the bank reserve ratio for big lenders to 17%. This is to reduce inflation and tame liquidity. Chinese consumer prices rose 2.4% in the year to March, surpassing the 2.25% rate on one-year certificates of deposit.
Closer home, output growth in India eased a little in April. However, it still held near a 20-month high touched in February while factory activity in South Korea picked up after a dip, surveys by HSBC/Markit showed on Monday. India’s PMI was seasonally adjusted after input prices remained near multi-year peaks, suggesting official wholesale price inflation could pick up from a 17-month-high of 9.9% in the latest data for March. The output price index rose for a second month in a row to 55.8 from 54.6. It has risen nearly four points since February. Foreign institutional investors were net buyers of Rs355 crore. Domestic institutional investors also bought stocks worth Rs217 crore. The rupee dropped due to the decline in the equity market and strength in the dollar against other currencies.
Tata Motors’ (down 2%) total sales including exports of commercial and passenger vehicles jumped 52% to 57,202 vehicles in April 2010 over April 2009. Domestic sales rose 49% to 54,065 units. Commercial vehicle sales in the domestic market rose 36% to 30,963 units. Passenger vehicle sales jumped 70% to 24,902 units. Passenger vehicle sales include distribution of Fiat cars by Tata Motors. Sales of the ultra-cheap car Tata Nano totaled 3,525 units in April 2010. Jyoti Limited (up 4.9%) has received an order worth Rs125.50 crore from the director general of the Mumbai Naval Dockyard through Hindustan Construction Company for Rs 85 crore for the reconstruction and dry docking at the city. The order includes supply, erection and commissioning of complete electro-mechanical works and pumps. The board of Kotak Mahindra Bank (down 0.1%) will consider a stock-split proposal along with the year ended March 2010 results on 11 May 2010. Sugar stocks fell after sugar prices were in steady decline after the government imposed various restrictions, including introduction of fortnightly non-levy sugar sale. Titan Industries (up 2.8%) has posted a growth of 49% and 81% in sales and operating profit respectively for the March quarter over the year-ago period.
In order to provide customised life insurance solutions to customers via the bank’s network, Max New York Life Insurance and Axis Bank have signed a 10-year bancassurance relationship
Max New York Life Insurance (MNYL), the seventh-largest life insurance company in India and the third-largest Indian private bank, Axis Bank, have signed a 10-year strategic bancassurance relationship to provide customised life insurance solutions to customers via the bank’s network.
“We are confident of making this bancassurance partnership with Axis Bank a great success. Our partnership with Axis Bank—one of the most admired banks with a strong countrywide distribution, is another step towards creating a top-of-the-rung balanced multi-channel distribution,” Analjit Singh, chairman, Max New York Life Insurance, said.
“Having built a strong customer-centric franchise, we believe that our new bancassurance tie-up with a trusted brand like Max New York Life Insurance will enhance our product bouquet,’’ said Shikha Sharma, managing director & chief executive officer, Axis Bank.
The bancassurance tie-up will help Max New York Life Insurance business to strengthen its distribution while Axis Bank will enhance its insurance product bouquet.
Operations will begin from today. It will also provide life insurance solutions to bank customers in 650 cities through more than 1,000 Axis Bank branches and intends to serve 20 lakh customers in five years.
“We also believe, given India's geographical diversity and low life insurance penetration level, multi-channel distribution is the most effective way to connect with new customers,” Mr Singh said.
Max New York Life already has a tie-up with 54 other banks which include Yes Bank and Barclays Finance. According to Rajesh Sud, managing director of Max New York Life Insurance, the company is selling 65% of its insurance products through its own distribution agencies while only 35% of its insurance is sold through other agencies like banks.
In an interaction with NGOs working for senior citizens, Susan B Somers, General Secretary of the International Network for the Prevention of Elder Abuse (INPEA) highlighted financial issues prevalent in the US and how they have been dealt with Moneylife Digital team
Susan B Somers, General Secretary of the International Network for the Prevention of Elder Abuse, Inc (INPEA) highlighted some financial issues that the elderly face in an interaction with other NGOs working for senior citizens. The interaction was organised by Silver Innings and Moneylife Foundation.
“There is a need to raise financial awareness among senior citizens, especially women. They do not understand wills, tax issues and transfers. This leaves them completely vulnerable to financial issues,” said Somers who is also United Nations NGO Coordinator for INPEA. She is associated with the Somers Law Firm, New York.
Highlighting instances of financial exploitation in the United States, she said, “There have been various cases of financial exploitation of the elderly like fraudulent selling of expensive security systems under the pretext of safety or charging exorbitant fees for simple day-to-day jobs like repairing a car.”
Among other financial exploitation cases were repeated mis-selling of insurance policies to the elderly. “There were insurance agents or brokers, who convinced the elderly to flip their current insurance policy with another one, stating that the existing was no more useful to them. In reality, every time the elderly person changed his insurance policy the broker earned a commission. It was in the benefit of the broker and the not the elderly person,” stated Ms Somers.
While the elderly are highly susceptible and gullible to financial exploitation at the hands of their own family members and relatives, certain groups also reportedly took advantage of the same. “There was a rampant selling of living trusts which promised wealth protection for the elderly from the Government, from paying taxes, from family and relatives. This was in the form of a document. They charged a huge amount of fees for this document. Most times, one did not even need such a protection,” Ms Somers said.
On being asked on what steps have been taken or should be taken to address such issues which are equally applicable to Indian senior citizens, she said, “The government should issue information. To take reverse mortgage as an example, the government should provide information stating these are the good points about the product and these are the bad points of the product, this helps the senior citizen take an informed decision.”
“Another significant step taken in the US was a law stating a cooling-in period of three days. If the seller or agent approaches the elderly, he cannot be forced to sign or agree to buy the product or service right away, a cooling-in period of three days has to be practised. This avoids the elderly from taking any hasty decision while under pressure,” she added.