Indian share markets open at new records. The BSE Sensex opened up by 303 points, while the Nifty is trading higher by 84 points
Asian stock markets are trading on a positive note today amid an ongoing rally in Japan, sparked by the planned exit of the prime minister and as traders assessed the challenges for reopening underscored by slower US hiring.
The Hang Seng and the Shanghai Composite are trading up by 0.4% and 1%, respectively. The Nikkei has zoomed 1.6%.
In US stock markets, Wall Street indices ended mixed on Friday after monthly employment data from the labour department came in far weaker than had been anticipated.
The Dow Jones Industrial Average fell 75 points, or 0.2% while the Nasdaq Composite Index rose 32 points, or 0.2%.
Back home, Indian share markets have opened on a positive note, following the trend on SGX Nifty.
The BSE Sensex is trading up by 303 points. Meanwhile, the NSE Nifty is trading higher by 84 points.
Reliance and L&T are among the top gainers today. Tata Steel, on the other hand, is among the top losers today.
Both, the BSE Mid Cap index and the BSE Small Cap index have opened higher by 0.5%.
Barring metal, all sectoral indices are trading in green with stocks in the energy sector and capital goods sector witnessing buying interest.
Shares of L&T Infotech and Adani Transmission hit their 52-week highs today.
The rupee is trading at 73.03 against the US$.
Gold prices are trading down by 0.2% at ₹47,450 per 10 grams.
Meanwhile, silver prices are trading up by 0.1% at ₹65,263 per kg.
Crude oil prices extended losses today after the world's top exporter Saudi Arabia slashed crude prices for Asia over the weekend, signaling that global markets are well supplied.
In news from the automobile sector, top automobile companies Maruti Suzuki, Toyota Kirloskar Motor and M&M are expecting sales to be better this festive season compared to last year.
This announcement comes even as the chip shortage continues to make situation challenging with companies struggling to sustain production schedules.
Automakers have witnessed robust demand so far and are now looking to spruce up supplies to dealers in order to serve customers during the peak of festive period in October.
Maruti Suzuki’s senior executive director Shashank Srivastava said,
At the moment demand looks ok. It is slightly better than last year. If we look at the bookings, enquiries, retails, these are robust. On the supply side of course we may have some adverse effects, we are monitoring that.
Maruti’s current inventory level is around 23-24 days while the appropriate level would be 30 days, Srivastava noted.
Meanwhile, M&M automotive division CEO Veejay Nakra noted that the opening up of the markets post the second wave has led to a rebound in overall demand and the early signs indicate a good festive season with strong demand compared to last year.
Given the steep increase in overall input costs, especially due to the continuing rise in commodity price, M&M has taken calculated price hikes and taken necessary steps to reduce costs, he added.
Automobile companies are caught up with the chip shortage crisis as they have announced that their output would be cut up to 40% due to the shortage.
The usage of semiconductors in the auto industry has gone up globally in recent times with technological advancements and new models coming with more and more electronic features.
It remains to be seen how companies cope up with the demand during festive season amid the chip shortage.
Moving on to stock specific news…
ICICI Lombard General Insurance is among the top buzzing stocks today.
Insurance regulator IRDAI (Insurance Regulatory and Development Authority of India) has granted the final approval for the demerger of the general insurance business of Bharti AXA General Insurance to ICICI Lombard General Insurance by way of a scheme of arrangement.
ICICI Lombard stated it received the IRDAI letter granting final approval to the proposed scheme on 3 September.
The appointed date for the scheme is 1 April 2020.
The demerger and transfer of general insurance business, as envisaged in the scheme, will be effective in 3 days from the date of the final approval.
IRDAI has also granted approval to ICICI Bank to bring down its stake in ICICI Lombard to 30%.
Last year, ICICI Lombard entered into a definitive agreement to acquire Bharti Enterprises-promoted Bharti AXA General Insurance in an all-stock transaction.
Based on the share exchange ratio recommended by independent valuers and accepted by the boards of the two companies, the shareholders of Bharti AXA shall receive two shares of ICICI Lombard for every 115 shares of Bharti AXA held by them.
Bharti Enterprises currently owns 51% stake in Bharti AXA General Insurance, while French insurer AXA has 49%.
Post demerger, Bharti AXA General Insurance will cease to be a going concern and both Bharti Enterprises and AXA will exit the non-life business.
ICICI Lombard share price has opened the day down by 1.3%.
Speaking of the insurance sector, have a look at the chart below which shows the investment assets of non-life insurers and life insurers over the past 10 years:
Investment Assets of Non-Life Insurers 11x That of Life Insurers
As per Tanushree Banerjee, Co-Head of Research at Equitymaster, the above chart is enough proof of how big an earning opportunity is the zero-cost float to the non-life insurers. Their investment assets under management is nearly 11 times that of life insurers.
Back in April 2021, Tanushree recommended a high-quality stock from this space.