FDI In Insurance Raised, Indian Stocks Hit Record Highs

Mumbai: A benchmark index of Indian equities markets Thursday hit a record high of 26,292.66 points, surpassing its highest peak of 26,190.44 points of July 8.

The index closed at 26,271.85 points (provisional), up 124.52 points or 0.48 percent from its previous closing of 26,147.33 points.

Healthy buying was observed in metal, information technology (IT), bank, fast moving consumer goods (FMCG) and capital goods stocks. However, consumer durables, healthcare, oil and gas and power scrips came under selling pressure.

The 30-scrip Sensitive Index (Sensex) of the S&P Bombay Stock Exchange (BSE), which opened at 26,188.50 points, closed trade at 26,271.85 points (provisional), up 124.52 points or 0.48 percent from the previous day’s close at 26,147.33 points.

The Sensex touched a high of 26,292.66 points and a low of 26,077.70 points  intra-day.

The S&P BSE metal index rose 196.37 points, IT index jumped 87.79 points, bank index gained 77.29 points, FMCG index increased 60.69 points and capital goods index ended 30.46 points up.

However, consumer durables index fell 80.26 points, healthcare index slipped 30.02 points, oil and gas index dropped 21.22 points and power index ended 7.44 points down.

The wider 50-scrip Nifty of the National Stock Exchange (NSE) was also closed 34.85 points or 0.45 percent up at 7,830.60 points.

The Nifty touched a new record high intra-day at 7,835.65 points, surpassing its record high of 7,809.20 points touched Wednesday.

India approved a proposal to increase foreign direct investment (FDI) limit in the insurance sector to 49 percent from the current 26 percent.

The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi okayed the proposal for the hike but maintains Indian management control. 

A senior government official who did not want to be named said the overseas investments in the insurance sector would be allowed through the Foreign Investment Promotion Board (FIPB) route. 

In the budget for 2014-15 presented earlier this month, Finance Minister Arun Jaitley had proposed to hike the overseas investment limit in the insurance sector to 49 percent.

Welcoming the government’s move, Confederation of Indian Industry (CII) director general Chandrajit Banerjee said the increase in FDI limit “will help attracting the much needed long term capital for the sector which can have multiplier effect on the state of economy especially in meeting the huge infrastructure financing requirements”. 

Capital infusion in the insurance sector, through greater FDI, would ensure innovations on product design and distribution, better risk management, introducing superior technology and greater investments.

CII said the end result will be sizeable improvement in the insurance penetration and density for the Indian economy which is considerably lower when compared with other emerging economies.

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