Sensex Opens Flat; Bank Stocks Lead The Losses

Asian equity markets are lower today as Japanese and Hong Kong shares fall. The Nikkei 225 is off 0.43% while the Hang Seng is down 1.01%. The Shanghai Composite is trading down by 0.07%. Overnight US stocks closed slightly lower after the Federal Reserve raised key interest rate by a quarter of a percentage point.

Meanwhile, share markets in India have opened the day on a flat note. The BSE Sensex is trading higher by 27 points while the NSE Nifty is trading lower by 7 points. The BSE Mid Cap Index and BSE Small Cap index both opened the up by 0.1% & 0.2% respectively.

Sectoral indices have opened the day on a mixed note with realty stocks and energy stocks leading the pack of gainers while information technology stocks and bank stocks have opened the day in red. The rupee is trading at 64.31 to the US$.

Bharti Airtel share price gained over 1.2% after it was reported that the company added more active subscribers than Reliance Jio Infocomm in April for the first time since the latter’s launch in September.

The company notched up 2.6 million active subscribers as compared to Jio’s 400,000 active (VLR) customer adds.

In the latest development, with the insurance regulator rejecting the HDFC Life and Max Life merger structure, HDFC is looking at selling 10% of its stake in its life insurance arm through an initial public offering (IPO).

Reportedly, the estimated asset size of this merger would have been approximately Rs 1.1 trillion if not more. As per reports, the parties had set 2018 as the deadline for completion of merger. No doubt, the regulator’s rejection has thrown a spanner into the works.

As per IRDAI, the proposed merger of Max Life and HDFC Life violates Section 35 of the Insurance Act, 1938, which does not allow merger of an insurance company with a non-insurance firm.

What is supporting an IPO decision is the positive market sentiment in respect of insurance. The only listed insurer ICICI Prudential, which had a couple of months earlier fallen below issue price, is now trading at a premium.