Latest news with #SecuritiesContracts(Regulation)Rules
Mint
5 days ago
- Business
- Mint
LIC share price rebounds 34% from March lows: Is there more upside left for investors?
Life Insurance Corporation share price in focus: Shares of Life Insurance Corporation (LIC), a leading insurance and investment corporation in India, have made a strong comeback in recent months, driven by improving technicals, market sentiment, and optimistic views from the top brokerages, propelling the stock to record one of the biggest turnarounds since its listing. LIC shares began their one-way rally in March after hitting a 52-week low of ₹ 715.30, gaining 34% to date. This rebound followed a period of sustained selling pressure between August 2024 and February 2025, during which the stock lost 40% of its value. However, LIC has managed to recover most of those losses within just four months. The rebound has not only helped shareholders recover earlier losses but also lifted the company's market capitalisation, which jumped by ₹ 2 lakh crore to reclaim the ₹ 6 lakh crore mark in mid-June after a gap of seven months. Although the stock picked up momentum in March, the real acceleration came after the release of March quarter results in late May, buoyed by strong VNB and AUM figures and further supported by robust policy sales—including a record-breaking 588,107 policies sold within 24 hours on January 20, 2025, earning a Guinness World Record. The strong performance led analysts to maintain their optimistic outlook on the company's growth prospects, with ICICI Securities expecting the stock to reach ₹ 1,040, while Geojit Financial Services projects it to rise to ₹ 1,088. Both have 'buy' ratings on the stock. Meanwhile, the stock remains tightly held, with 96.5% ownership still with the government. Retail shareholders held a 2.1% stake in the company at the end of the March 2025 quarter. The company is still not in compliance with SEBI's minimum public shareholding (MPS) norm, which requires promoter holding to be brought down to 75%. Market participants cite a regulatory clause as the reason for the delay, Section 19(a) of the Securities Contracts (Regulation) Rules, 1957, which allows the government to extend the compliance deadline for listed PSUs. In July 2024, the government extended the deadline for PSUs to become MPS-compliant by two years, pushing it to August 2026. The extension was necessitated as the earlier deadline was set to end on August 1, 2024. Anshul Jain, Head of Research at Lakshmishree Investments, said, "LIC is shaping up a classic cup and handle pattern that's been developing for 127 days, backed by steady accumulation on daily charts, a clear sign of underlying strength. A decisive breakout above 980 could unlock fresh momentum, pushing the stock swiftly towards the 1,100 mark. Traders should keep an eye on volume confirmation during the breakout to gauge conviction. This setup shows that LIC might be ready for a strong leg up if market conditions hold steady." Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Business Standard
25-06-2025
- Business
- Business Standard
Centre may speed up stake dilution in GIC Re, New India Assurance
The Union finance ministry is planning to dilute at least half of the required stake in general insurance companies such as New India Assurance Company and General Insurance Corporation of India (GIC Re) in 2025-26 (FY26) to ensure compliance with the minimum public shareholding (MPS) norms mandated by the Securities and Exchange Board of India (Sebi), according to a senior government official. As of now, the government holds 85.44 per cent in New India Assurance and 82.4 per cent in GIC Re. Sebi mandates all listed companies, including public sector insurers, to maintain a minimum of 25 per cent public shareholding under Rule 19A of the Securities Contracts (Regulation) Rules, 1957, and Regulation 38 of the Sebi (Listing Obligations and Disclosure Requirements) Regulations. This means the government has to dilute a 10.44 per cent stake in New India Assurance and 7.4 per cent in GIC Re. 'We are committed to meeting the MPS norms within the stipulated time frame. To achieve this, we plan to dilute stakes in a phased manner,' said the official. 'For instance, for GIC Re, the target is to dilute nearly 3.5 per cent, while for New India Assurance, we aim to offload about 5 per cent by the end of FY26.' The official said that in coordination with the insurance companies, the government will soon launch fresh roadshows to engage with potential investors. 'We are also expecting to receive some extension from the regulator in the case of GIC Re and New India Assurance, whose current deadline stands at August 2026,' the official added. 'Since the stake dilution will be carried out in tranches, we may need to pause between issues, depending on market appetite and conditions.' An email sent to the finance ministry remained unanswered until the time of going to press. The finance ministry had floated a request for proposal in February to dilute its equity in select public-sector banks and listed public financial institutions by inviting bids from merchant bankers and legal advisors. The Department of Investment and Public Asset Management Secretary Arunish Chawla told Business Standard in an interview last month that about a dozen merchant bankers have been approved for these financial transactions. Chawla had said that the government plans to divest a 6.5 per cent stake in Life Insurance Corporation (LIC) of India in tranches over the next 24 months. The Sebi has permitted LIC to raise its public stake to 10 per cent by May 16, 2027. The insurance behemoth was listed in May 2022 with a 3.5 per cent dilution of the government's stake. 'This year, you will see that we will follow a strategy of regular offers for sale in small tranches. We are officially giving forward guidance that small investors should look out for it,' Chawla said. While most central public sector enterprises have now met the MPS norm, Chawla said that a few sectors, such as defence, railways, and financials, are still left out. 'We are actively pursuing their disinvestment. Hopefully, within the next one year, we would like all of them to achieve MPS norms. That is critical because it helps create sufficient stock and float in the market. The pricing decision is better, and the market discipline on behalf of the enterprise is also improved,' he added.
Economic Times
10-06-2025
- Business
- Economic Times
Zerodha's Nithin Kamath hails SCRA rule clarification for stock brokers, "huge" for Rainmatter. Here's why
Zerodha Founder & CEO Nithin Kamath on Tuesday lauded Indian finance ministry and NSE for clarification of SCRA rules enabling stock brokers to invest their own funds without exchange approvals or restrictions. Calling it huge for Rainmatter, an initiative by Zerodha which supports and invests in Indian startups, Kamath said that Zerodha will now be able to allocate more capital to support domestic startups directly from the brokerage entity. ADVERTISEMENT "Finally, after clarification of SCRA rules by @FinMinIndia and NSE, brokers can now invest their own funds without exchange approvals or restrictions. This is huge for @Rainmatterin. We can now allocate more capital to support Indian startups directly from the brokerage entity," Kamat tweeted on his official X handle. The government had in May, amended the Securities Contract (Amendment) Rules to give regulatory clarity and enhance ease of doing business for stock brokers. "Amendment gives regulatory clarity to enhance ease of doing business for brokers," the finance ministry said. Through a circular issued on May 16, the Ministry of Finance recently changed certain rules about how stockbrokers can invest their own money. The main point of the change is that when a stockbroker invests his own money, it will generally not be considered as part of their "broking business" subject to certain conditions.'Provided further that investments made by a member shall not be construed as business except when such investments involve client funds or client securities or relate to arrangements which are in the nature of creating a financial liability on the broker,' the clarification said. The government amended the rules by inserting this provision in Rule 8 of the Securities Contracts (Regulation) Rules, means they won't have to follow the same strict rules that apply to client-related transactions. ADVERTISEMENT However, there are exceptions to this rule. If the investments made by stock brokers involve client money or client securities, or if these investments create a financial risk for their brokerage firm, then these investments will still be treated as part of their business and subject to the usual rules.'Provided further that investments made by a member shall not be construed as business except when such investments involve client funds or client securities or relate to arrangements which are in the nature of creating a financial liability on the broker,' the clarification said. ADVERTISEMENT Also Read: Zerodha's MTF bet pays off, touches Rs 3,000 crore in 6 months despite a bear market: Nithin Kamath (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times) ADVERTISEMENT (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
10-06-2025
- Business
- Time of India
Zerodha's Nithin Kamath hails SCRA rule clarification for stock brokers, "huge" for Rainmatter. Here's why
Zerodha Founder & CEO Nithin Kamath on Tuesday lauded Indian finance ministry and NSE for clarification of SCRA rules enabling stock brokers to invest their own funds without exchange approvals or restrictions. Calling it huge for Rainmatter, an initiative by Zerodha which supports and invests in Indian startups, Kamath said that Zerodha will now be able to allocate more capital to support domestic startups directly from the brokerage entity. "Finally, after clarification of SCRA rules by @FinMinIndia and NSE, brokers can now invest their own funds without exchange approvals or restrictions. This is huge for @Rainmatterin. We can now allocate more capital to support Indian startups directly from the brokerage entity," Kamat tweeted on his official X handle. The government had in May, amended the Securities Contract (Amendment) Rules to give regulatory clarity and enhance ease of doing business for stock brokers. "Amendment gives regulatory clarity to enhance ease of doing business for brokers," the finance ministry said. Through a circular issued on May 16, the Ministry of Finance recently changed certain rules about how stockbrokers can invest their own money. The main point of the change is that when a stockbroker invests his own money, it will generally not be considered as part of their "broking business" subject to certain conditions. 'Provided further that investments made by a member shall not be construed as business except when such investments involve client funds or client securities or relate to arrangements which are in the nature of creating a financial liability on the broker,' the clarification said. The government amended the rules by inserting this provision in Rule 8 of the Securities Contracts (Regulation) Rules, 1957. This means they won't have to follow the same strict rules that apply to client-related transactions. However, there are exceptions to this rule. If the investments made by stock brokers involve client money or client securities, or if these investments create a financial risk for their brokerage firm, then these investments will still be treated as part of their business and subject to the usual rules. 'Provided further that investments made by a member shall not be construed as business except when such investments involve client funds or client securities or relate to arrangements which are in the nature of creating a financial liability on the broker,' the clarification said. Also Read: Zerodha's MTF bet pays off, touches Rs 3,000 crore in 6 months despite a bear market: Nithin Kamath
Time of India
08-06-2025
- Business
- Time of India
Explained: How new rule tweak frees up stock brokers to invest beyond securities
Live Events In a welcome step for the broking industry, the government has amended Rule 8 of the Securities Contracts (Regulation) Rules, 1957 ( SCRR ), providing long-awaited clarity on what does not constitute 'business' for a stockbroker. The amendment addresses a long-standing industry concern around regulatory restrictions that limited brokers from investing their own surplus funds in non-securities 8 of the SCRR lays down the eligibility conditions for a person to act as a stockbroker or a member of a recognised stock exchange . Under sub-rules (1)(f) and (3)(f), brokers are prohibited from engaging in any business other than that of securities, unless such business is carried out without any personal financial liability. This essentially prevented brokers from exposing themselves to financial risks unrelated to their core broking time, the National Stock Exchange and the Bombay Stock Exchange issued circulars that significantly widened the interpretation of 'business' under Rule 8 of the SCRR. These circulars clarified that even passive investments in group companies (subsidiary or associate) engaged in non-securities businesses (such as NBFCs, real estate or insurance) would be treated as 'business' and would be in violation of Rule 8. This interpretation created a regulatory overhang that discouraged brokers from investing their own profits outside the securities practice, brokers were restricted from investing their retained earnings or surplus capital into group ventures operating outside the securities domain, even where such investments posed no financial risk to the broker or its clients. This created a significant operational constraint. If a broker wished to invest in a non-securities business, it first had to route profits to its parent, typically via dividends or buybacks, incurring additional tax liabilities before the funds could be redeployed by the parent. This structure was inefficient and deterred brokers from pursuing legitimate investment opportunities that could enhance their business offerings and these industry concerns, the Ministry of Finance released a consultation paper in September 2024 proposing a more nuanced interpretation of Rule 8. It clarified that the original intent of the restriction was to protect client interests and ensure the financial soundness of the brokers, not to place undue limitations on the use of their own capital. Since stockbrokers are already subject to stringent SEBI regulations aimed at safeguarding client funds, further restricting them from investing in group companies engaged in non-securities businesses under the guise of protecting client funds seemed excessive and position has now been codified through an amendment to Rule 8. It now clarifies that a broker's investment activity will not be treated as 'business', unless it involves client funds, client securities or creates a financial obligation for the broker. This empowers brokers to freely invest their retained earnings and surplus capital in group companies or unrelated ventures, so long as client interests remain unaffected. Brokers can now participate in broader financial services ecosystems such as lending or insurance through subsidiaries, allowing them to diversify revenue streams and build integrated financial this amendment to Rule 8 is now effective and offers much-needed regulatory clarity, it is worth noting that the circulars issued by NSE and BSE interpreting the earlier position have not yet been formally withdrawn. This could create some ambiguity for brokers on how the exchanges will align with the amended Rule 8, particularly given that the validity of the NSE circular had been challenged before the Bombay High Court. Until the exchanges formally update their stance, brokers may continue to face uncertainty in practice despite the regulatory intent to liberalise.(The authors Prashanth Ramdas is Partner and Shivaang Maheshwari is Associate at Khaitan & Co. The views expressed are personal.)
