Sebi may seek stock deals from risk firms

In a move to bring more transparency into the stock market on a day-to-day basis, the Securities and Exchange Board of India (Sebi) may ask insurance companies to report their daily transactions in the stock market.

At present, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) come out with daily transaction reports of foreign and domestic institutional investors at the end of each trading session.

The transactions by insurance companies are clubbed with the domestic institutional investors (DIIs), which also includes transactions made by mutual funds and banks.

It is likely that the DII data released by the stock exchanges will give a break-up on the transactions made by insurance companies, said sources. Mutual funds report their transactions to Sebi, which in turn release the data a day after.

In the last two weeks, when foreign funds were in the selling spree, it was believed that the local mutual funds saved the market from a free fall.

However, market analysts say the insurance companies, led by the Life Insurance Corporation of India (LIC), played a big role in providing stability to the market, a fact that is overlooked at the time when foreign institutional investors (FIIs) are selling heavily.

The market participants insist that it is high time that this "gentle giant" comes to the limelight so that the complete picture is known.

In the last three months, domestic institutions have been placing big orders in the secondary market even as FIIs continue to sell to cover for losses as a result of exposures in the US subprime mortgage market.

Secondary market operations data (for the Bombay Stock Exchange and the National Stock Exchange combined) show net sales by FIIs for August at Rs 12,338 crore and purchases by domestic institutions at Rs 9,149 crore. In June, domestic institutional purchases at Rs 4,560 crore were the highest for the current financial year.

"We have bought equities worth more than Rs 600 crore for the unit linked insurance policies," said a senior LIC official. However, he refused to divulge the total purchases made by them in the last few months.