After opening the day in red, Share markets in India have traded on a volatile note and are presently trading above the dotted line. Sectoral indices are trading on a positive note, with stocks in the consumer durables sector and stocks in the auto sector witnessing maximum buying interest.
The BSE Sensex is up by 125 points (up 0.4%) and the NSE Nifty is trading up by 24 points (up 0.2%). Meanwhile, the BSE Mid Cap index is trading up by 0.6%, while the BSE Small Cap index is trading up by 0.7%. The rupee is trading at 64.69 to the US$.
In news from stocks in the oil and gas sector. ONGC share price and Oil India share price are among the top gainers on the bourses today. The surge comes amid reports that the oil ministry is considering handing over 15 functional oil and gas fields run by ONGC and Oil India Ltd (OIL) to private players.
According to media reports, the oil ministry is expected to approach the Union Cabinet to allow private companies take 60% stake in producing oil and gas fields of national oil companies, ONGC, and OIL, with the view that they would raise production above the baseline estimate.
The oil ministry has identified as many as 15 fields - 11 of ONGC and four of Oil India - with cumulative inplace reserve of 791.2 million tonnes of crude oil and 333.5 billion cubic metres of gas have been identified.
ONGC, India's largest explorer, will lose control over 11 fields, including Kalol, Ankleshwar, Gandhar - all prized projects producing oil and gas - and the Santhal oilfield. OIL will lose Moran, Greater Dikom, Greater Chandmari and Eastern Satellite, all of which produce oil.
All of these oil fields are in blocks or areas that were given to the national oil companies on nomination basis and the current policy does not allow private firms taking equity stake in a nomination block. This would require a change in policy, for which the oil ministry is approaching the cabinet.
The fields would be auctioned and any firm committing the maximum capital investment within 10 years of the contract award and the largest share out of its net revenue to the government would be awarded the field.
At the time of writing, ONGC share price was trading up by 4.2%, while OIL share price was trading up by 2%.
Moving on to news from stocks in the IPO space. HDFC Standard Life Company Ltd. (HDFC Life) is set to come out with its initial public offering (IPO) tomorrow.
HDFC Life is the first private life insurance company to register in India and was established in 2000 as a joint venture between HDFC Limited and Standard Life Aberdeen plc through its wholly owned subsidiary, Standard Life Mauritius.
It offers a wide range of individual and group insurance solutions including Protection, Pension, Savings & Investment and Health, along with Children's and Women's Plan. As on Sept 2017, its product portfolio comprised of 32 individual and 10 group products as well as 8 optional rider benefits. It sells policies through its own branches, insurance agents, partner banks and through other financial institutions.
HDFC Life plans to raise over Rs 86.95 billion through its offer for sale, which will see its existing shareholders HDFC and Standard Life dilute about 15% of their holdings.
Being a life insurance player, HDFC Life has huge potential for growth as the Indian insurance market is underpenetrated.
Insurance Protection Deficient in India
With 23 players, the life insurance industry in India is valued at Rs 4.2 trillion, based on premium (FY17). However, insurance protection in India remains grossly inadequate. This explains the huge protection gap of US$ 8.5 trillion for the country as of 2014.
As per a Swiss Re report, India's protection gap stood at a staggering 92% and was the highest among all countries in the Asia Pacific. What this means is that for US$ 100 of insurance protection required, the country had insurance protection of a mere US$ 8 as of 2014. This is abysmally inadequate with a large part of the population still bereft of protection coverage.
HDFC Standard Life Company Ltd is scheduled to hit the market on 7 November 2017. It has set a price band of Rs 275-290 and seeks to raise up to Rs 86.95 billion.
But do the company's fundamentals justify the price it is asking for in the primary market? We have released an IPO note, with our recommendation for the HDFC Life IPO, you can access it here.
Comments
Log in or sign up to join the conversation.