The domestic market snapped its two-day winning streak, ending in the red on dismal global cues and profit booking in heavyweights. Sentiments were also down as government data showed a fall in industrial growth for the month of August.
The market opened on a subdued note tracking its Asian peers and on cautiousness ahead of the release of the industrial growth data for the month of August. Selling pressure in heavyweight stocks and lower-than-expected Index of Industrial Production (IIP) data pushed the indices down further. The market traded sideways in the post-noon session as the key European barometers were trading with deep cuts. It ended the session down nearly three-quarters of a percent.
The Sensex closed 136.55 points (0.67%) at 20,203. The index touched a high of 20,368 and a low of 20,107, mid-session. The Nifty settled at 6,090, down 44.95 points (0.73%) after touching an intraday high of 6,145 and a low of 6,058.
The losers outnumbered the gainers today. Of the 30 Sensex stocks, 22 ended in the red while eight settled higher. The Nifty had 39 declining stocks against 11 on the advancing side. Among the broader indices, the BSE Mid-cap index was down 0.51% while the BSE Small-sap ended flat.
Mahindra & Mahindra (up 1.31%), Reliance Communications (up 1.06%) and TCS (up 0.89%) were the top gainers on the Sensex while DLF (down 2.07%), Hindalco Industries (down 2.05%) and Jindal Steel (down 1.97%) were the main losers on the bellwether index.
The sectoral gainers were BSE IT (up 0.22%), BSE Healthcare (HC) (up 0.18%) and BSE TECk (up 0.10%). The sectoral losers were led by BSE Realty (down 1.80%), BSE Capital Goods (CG) (down 1.58%) and BSE Metal (down 1.43%).
Industrial growth slowed down to 5.6% in August from 10.6% in the corresponding period last year, on the back of a 2.6% contraction in the capital goods production.
Among the main industry segments, manufacturing activity declined to 5.9%, mining grew by 7% electricity generation grew by 1% while capital goods sector contracted by 2.6% in August.
Markets in Asia, with the exception of Shanghai Composite, ended the day in the red on concerns about earnings reports from corporates. Besides, a stronger yen has analysts worried as it would dent exporters’ fortunes.
The Hang Seng was down 0.37%, Jakarta Composite was down 0.04%, KLSE was down 0.06%, Nikkei 225 tanked 2.09%, Straits Times was down 0.44%, Seoul Composite lost 1.16% and Taiwan Weighted shed 1.06% today.
Finance minister Pranab Mukherjee today met financial sector regulators, including Reserve Bank of India (RBI) governor D Subbarao and Securities and Exchange Board of India (SEBI) chairman C B Bhave, to work out a framework for the Financial Stability and Development Council (FSDC) - a body which will deal with inter-regulatory issues.
Wall Street closed a tad higher on Monday amid low volumes on concerns about earning reports from corporates. Investors chose to book profits after the recent rally in stocks. Besides, expectations of the Federal Reserve’s move to prop up the economy, has already been factored in.
The Dow gained 3.86 points (0.04%) at 11,010. The S&P 500 added 0.17 points (0.01%) to 1,165.32. The Nasdaq rose 0.42 points (0.02%) 2,402.
The Insurance Regulatory and Development Authority (IRDA) today said the guidelines for insurance companies to tap the capital market for funds were awaiting the Securities and Exchange Board of India's (SEBI) nod and would be out soon.
"Initial public offer (IPO) guidelines for insurance companies will be out soon. It has been approved by the joint committee of SEBI and has to be approved by the SEBI (board)," IRDA chairman J Hari Narayan said.
Foreign institutional investors were buyers of stocks worth Rs810 crore on Monday. Domestic institutional investors were sellers of Rs575 crore worth equities on the same day.
Third party administrators have moved the Competition Commission to block public sector insurers from floating their own TPA entity. Will the private TPAs’ move hold water?
Third party administrators (TPAs), intermediaries who handle insurance claims, have moved the Competition Commission of India (CCI) and the Insurance Regulatory and Development Authority of India (IRDA) to block a move by state-owned non-life insurers to float a captive company to manage claims.
However, the TPAs' case could considerably weaken given the plans of government-controlled insurance companies. Speaking with the media at a press conference of LICHFL Financial Services Ltd and United India Insurance, G Srinivasan, CMD, United India Insurance said, "We will not get rid of TPAs, only give partial business to a new common TPA entity." This stance taken by PSU insurers will surely weaken the TPAs' case.
Mr Srinivasan declined to give specifics on proportion of business distribution between common TPAs and existing TPAs. According to sources, "It is expected that 50%-75% of the health insurance premium of four PSU insurers would be transferred to the new (TPA) entity by its third year of operation and 75%-100% of their health insurance premium would be transferred to it by the fifth year. But all this is subject to its performance, especially in terms of reduction in claims."
The CCI has set Wednesday (13rd October) as the date for the hearing of the petition submitted by TPAs.
Last week Mr Ramadoss, CMD, New India Assurance, told the media at a seminar that they have received 24 bidders to partner in their TPA venture. He added that GIPSA has not yet received any notice from CCI.
Meanwhile, IRDA is understood to have refused to entertain the complaints of the TPA Association, association sources said.
According to Sunil Sarnobat, co-founder and director of Medimanage insurance brokers, "All four public sector insurance companies coming together and deciding on a single TPA could be interpreted as cartelisation as these four government companies are separate legal entities. However, the TPAs cannot force an insurance company to use their services and insurance companies have been selecting TPAs for their various offices based on capability, fees charged, claims processing quality & technology implementation. We have examples of private insurers going in for in-house claims processing and hence you cannot stop insurers from setting up their own TPA. So it's not what is being done that is questioned. It's about who is doing it and the manner in which this is being done that makes it questionable."
Most of the TPAs are not eligible to bid because of the criteria that require the bidder or their parent to have a net worth of Rs250 crore.
TPAs fear that the captive company will put them out of business which will result in cartelisation, market dominance and monopolisation by state-owned companies who account for over 80% of the TPA business. The association has alleged that through the new TPA company, insurance companies would try to become a third party which would defeat the very purpose of consumer protection and neutrality which a third party has. Existing TPAs would have to stop their investments in business and IT and lay off the 10,000 people they have employed.
TPAs allege that if they shut shop, no insurer will be able to give policyholders a choice of TPAs as required by IRDA. Moreover, no new health company can come up as there wouldn't be any independent TPA to provide it with infrastructure support. The regulator has so far not permitted private insurers to take a stake in the TPA business. Given this stance, TPAs say the regulator cannot grant permission to public sector companies.
"The move will result in closure of all existing TPA companies. This will give rise to an arbitrary increase of premium, refusal of policies to the elderly, restrictions on cashless network, favouritism under the guise of preferred network of hospitals and corruption," TPAs have alleged in their letter to IRDA.
So who will blink first - the TPAs or the public sector insurers?
New Delhi: The merger and acquisition (M&A) deal value in India has reached a record high of $44.2 billion so far this year and the outlook for the coming months looks bullish, reports PTI quoting a report.
According to a report by merger market, a M&A intelligence service provider, M&A activities in the country generally saw significant improvement in the past three quarters as 183 deals worth $44.2 billion were announced, up 24.5% in volume terms and 312.9% in deal value from a ago.
"We expect to see a lot more strategic activity in India as private equity players shy away from the sky-high valuations being demanded by shareholders," merger market Asia Pacific deputy editor Anjali Naik said.
Going forward, Ms Naik said the consumer, travel and hospitality sector may see a large number of M&A deals and India may trade into newer territories in the coming months.
"We are also seeing India forge acquisitions in new countries - such as Sri Lanka, given the proximity and cultural ties, and Australia - given their high quality resources and tech-savvy market," Ms Naik added.
The Indian government's auction of third generation (3G) and broadband wireless access (BWA) spectrums worth $11.009 billion and $5.473 billion, respectively contributed significantly to the deal tally.
A sector wise analysis shows that the technology, media and telecoms sector accounted for 47.3% of the total M&A deal value till date, while, the energy, mining and utilities sector, was the second most-active sector, as it contributed 26.3% in deal value for the first three quarters of 2010, the report said.
Rothschild topped the financial advisors league table In the first three quarters of 2010, as it advised on M&A transactions with a total value of $27.4 billion, while, Ernst & Young topped the deal count financial advisers table by advising on 18 deals, the report said.
Some of the announced deals so far this year include the $10.7 million Bharti-Zain deal, Vedanta's 60% stake buy in Cairn India worth $9.1 million, the $3.7 million Abbott Laboratories-Piramal Healthcare deal, the report added.