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Sensex Opens Marginally Up; ICICI Lombard Makes a Weak Debut
Wed, 27 Sep 09:30 am | Rini Mehta, TM Team

Asian stock markets are higher today as Chinese and Hong Kong shares show gains. The Shanghai Composite is up 0.02% while the Hang Seng is up 0.42%. On the other hand, the Nikkei 225 is trading lower by 0.29%. US stocks closed narrowly mixed Tuesday as technology stocks recovered some of their losses.

Back home, share markets in India have opened the day on a positive note. The BSE Sensex is trading higher by 73 points while the NSE Nifty is trading higher by 9 points. The BSE Mid Cap and BSE Small Cap index opened the day on up by 0.4% & 0.8% respectively.

Barring metal stocks and healthcare stocks, all sectoral indices have opened the day in green with stocks from realty sector and consumer durables sector leading the pack of gainers. The rupee is trading at 65.34 to the US$.

The government on Tuesday revealed that the GST revenue collections in August stood at Rs 906.7 billion as on September 25 versus Rs 950 billion in July.

The total CGST collection in August was at Rs 144 billion, while the government received Rs 210.7 billion as SGST revenues and Rs 47,377 through IGST. The GST compensation cess added Rs 78.2 billion to the government's kitty.

For August, only 3.7 million taxpayers out of a total 6.8 million registered taxpayers filed their GST. Compliance for the month stood at 55%, down from around 65% last month.

Last month, finance minister Arun Jaitley had said that India's GST collections of Rs 922.8 billion for July was above the government's tax collection target for the month.

The tax mobilisation for July stood at 64.4% of the 5.96 million taxpayers registered with the new Goods and Services Tax (GST). Arun Jaitley had said that the mobilisation number would likely go up after all taxes are accounted for.

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As we have been saying, GST is a much-needed economic reform. It should eventually expand India's narrow tax base and increase government revenues. But only growth will determine how well the Indian economy has adapted to GST.

Our colleague Vivek Kaul, has studied the finer aspects of the GST and predicted what could go right and wrong.

Download his special report - The Good, the Sad and the Terrible (GST).

Moving on to the news from IPO space. ICICI Lombard General Insurance Company is set to debut on the bourses today. It had set final issue price at Rs 661 per share, the higher end of price band.

ICICI Lombard has launched the initial public offering (IPO) to 57 billion rupees (US$886 million). The offer recieved a good response from public and was nearly three times subscribed on the last day of the IPO application.

The IPO by company was one of the biggest IPOs of 2017 and also the first non-life insurer in India to launch an IPO.

ICICI Bank Ltd and Canada's Fairfax Financial Holdings Ltd, the main shareholders of the company - sold a combined 86.2 million shares in the biggest Indian private sector non-life insurer.

The reserved portion of qualified institutional investors has oversubscribed 8.17 times while the retail category showed a subscription of 1.22 times and non-institutional investors 0.82 times.

Undoubtedly, the life insurance sector has huge potential for growth. Additionally, factors such as increasing youth population, rapid urbanisation, expanding financial literacy, and higher government focus on financial inclusion and risk coverage will spur demand further for insurance products in the country.

Therefore, with the stock markets buzzing, insurance companies are also making a beeline to capitalise on the IPO frenzy. After ICICI Prudential got listed last year, a number of both life and non-life insurance companies have lined up their IPOs this year.

Insurance Protection Deficient in India

But 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.

Our big-picture editor, Vivek Kaul, recently penned a pertinent report on entire insurance industry. We strongly recommend you go through the full report on what's really happening in the insurance industry in India...and how it affects you. If you have not accessed Vivek Kaul's Letter yet, sign up here.

By the way, we have also prepared a guide to help you understand the valuation of insurance businesses.

Meanwhile, Prataap Snacks' Rs 4.8-billion initial share sale offer has received strong response from investors, oversubscribing 47.03 times on the final day.

The initial public offer (IPO) has received bids for over 170 million equity shares against the total issue size of 36,27,518 shares, excluding anchor investors' portion.

To know more about both the companies, you can access our IPO note on the same in our IPO section.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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Mar 22, 2018 (Close)