Market may open slightly higher

Trading of Nifty 50 index futures on the Singapore stock exchange indicates that the Nifty could gain 16.95 points at the opening bell.

In overseas markets, Asian stocks were mixed. US stocks fell on Friday, 3 June 2016 after data showed US employers last month added the fewest jobs in more than five years.

Federal Reserve Governor Lael Brainard on Friday, 3 June 2016 called for the central bank to wait for more data before lifting interest rates as she said the jobs report shows the labor market has slowed.

Closer home, foreign portfolio investors (FPIs) bought shares worth a net Rs 1,585.01 crore on Friday, 3 June 2016, as per provisional data released by the stock exchanges.

Domestic institutional investors (DIIs) sold shares worth a net Rs 393.21 crore on Friday, 3 June 2016, as per provisional data.

Among corporate news, Maruti Suzuki India (MSIL) after market hours on Friday, 3 June 2016 reported a 1.57% growth in its total production at 1.29 lakh units in May 2016 over May 2015.

Housing Development Finance Corporation announced after market hours on Friday, 3 June 2016, that the board of directors of HDFC ERGO General Insurance Company (HDFC ERGO), a non listed subsidiary of the company, has approved the acquisition of a 100% stake in L&T General Insurance Company for an aggregate consideration of Rs 551 crore.

The board of HDFC ERGO also approved the plan to merge the two companies subject to all regulatory approvals.

The acquisition would help HDFC ERGO improve its market position. HDFC ERGO expects significant cost synergies arising out of business, technology optimization and rationalization of offices.

HDFC ERGO, a 51:49 joint venture between housing major HDFC and ERGO International, Germany (part of Munich Re Group), is the 4th largest private sector general insurer in India and offers all lines of general insurance products including motor, health, personal accident, home, fire, marine, aviation, liability, crop insurance etc.

In a separate announcement after market hours on Friday, 3 June 2016, L&T said that it entered into a share aale and purchase agreement with HDFC ERGO General Insurance Company (HDFC ERGO) for sale of its entire stake in L&T General Insurance Company (LTGI), a wholly owned subsidiary of L&T, for a total consideration of Rs 551 crore.

The transaction envisages share sale by the Company to HDFC ERGO and subsequent merger of HDFC ERGO and LTGI.

The transaction is subject to various approvals, including approval of Insurance Regulatory and Development Authority of India and the Bombay High Court.

Upon closing, the L&T Group would exit from the general insurance and health insurance business. LTGI gross earned premium income during the year 2015-2016 was Rs 483 crore, constituting around 0.5% of the company’s consolidated revenue for the year 2015-2016 and reported a net worth of Rs 142 crore as on 31 March 2016. The share sale is part of the company’s strategy of exiting from its non-core activity.

Index heavyweight Reliance Industries (RIL) after market hours on Friday, 3 June 2016, announced that it has restarted its purified terephthalic acid (PTA) plants, and is ramping up production to full capacity at Dahej. The PTA plants had been shut for a brief period owing to increased water salinity.

RIL said it ensured PTA supplies to downstream customers from its Hazira and Patalganga plants during the brief shutdown at Dahej. Now, the customers will be getting PTA from all three locations, RIL said.

Initial gains for the two key benchmark indices triggered by the weather office retaining its forecast of above normal rains for the 2016 southwest monsoon season could not be sustained on Friday, 3 June 2016 as the outcome of monthly survey showed that the rate of growth in India’s services sector eased last month. The Sensex lost 0.11 points to settle at 26,843.03, its lowest closing level since 1 June 2016.

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