Benchmarks slip to day’s low on incremental selling pressure; negative European markets start weigh

Local equity markets magnifying losses are currently languishing at day’s low level on incremental selling pressure by funds and retail investors amidst somber global cues. Pessimistic European markets, which halting their three-week rally and tracking a selloff on Wall Street on Friday, where a number of high-growth companies mostly in the tech and biotech tumbled, got off to a tepid start, weighed on the sentiment. Meanwhile, Asian pacific shares fell for the first time in nine days, snapping the longest winning streak on the regional gauge this year, with telecommunication and technology shares leading declines. 

Back on Dalal Street, languishing at day’s low, while Sensex slipped below the crucial 22,250 level, Nifty was holding above the crucial 6,650 bastion, albeit with losses of over half a percent. Meanwhile, broader indices also depicting weak trend, were trading in red with losses in the range of 0.45%-0.85%. Amidst across the board selling pressure, while no sectoral indices managed to show any kind of resilience, stocks from Realty, Consumer Durables and  Power counters were the top losers on the index. The overall market breadth on BSE was undoubtedly in the favour of declines which thumped advances in the ratio of 1296: 504; while 29 shares remained unchanged.

The BSE Sensex is currently trading at 22212.45, down by 147.05 points or 0.66% after trading in a range of 22,481.62 and 22201.39. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices to added losses; the BSE Mid cap index was down by 0.88%, while Small cap index down by 0.42%.

While there were no gainers on Sensex, top losers were Realty down by 2.03%, Consumer Durables down by 2%, Power down by 1.15%, Metal down by 0.88% and Healthcare down by 0.83%

The top gainers on the Sensex were Sun Pharma up by 0.79%, M&M up by 0.68%, Gail India up by 0.65%, Gail India up by 0.65%, SSLT up by 0.61% and Wipro up by 0.55%. On the flip side, BHEL down by 3.40%, Maruti Suzuki down by 2.48%, Hindalco Industries down by 2.29%, Cipla down by 2.14% and ICICI Bank down by 1.95% were the top losers on the index.

Meanwhile, the Reserve Bank of India (RBI) is likely to order banks to scrap penalty on pre-payment of all retail and small corporate loans and also scrap fines for failure to maintain minimum balance. Statically, about a quarter of bank loans are retail loans while the share of small and medium enterprise loans is about 15%.

According to RBI, there is no rationale for banks to levy such kind of prepayment charges on any loan since the entire system has been moved to floating rates, where rates are charged based on the prevailing markets.  It is in view of this, that the central bank had advised lenders to stop levying such penalties.

Furthermore, banks also were understood to have discriminatory approach between retail and big corporate clients, with the latter enjoying the benefit of lower interest and no pre-payment penalty clause simply because of their sheer size. However for retail, citing costs, domestic banks charge between half and four percentage points of outstanding loans if customers attempt to pre-pay mortgage, while the charges for non-maintenance of minimum balance vary between Rs 500 and Rs 2,000.

However, this is not for the first time that the banks and the sector regulator may be loggerheads. Three years ago, the RBI had directed banks not to charge any penalty on prepayment of home loans, after a similar nudge did not work.  Nevertheless, banks continued to charge pre-payment penalty on other floating rate loans products such as education, personal and car loans.

The CNX Nifty is currently trading at 6,653.90, down by 40.05 points or 0.60% after trading in a range of 6,725.15 and 6,651.30. There were 20 stocks advancing against 30 declining on the index.

The top gainers of the Nifty were Ultratech Cement up by 3.01%, Ambuja Cement up by 2.02%, NMDC up by 1.78%, Grasim up by 1.71% and ACC up by 1.07%. On the flip side, Jindal Steel down by 5.83%, DLF down by 3.72%, BHEL down by 3.32%, Maruti down by 2.69% and IDFC down by 2.48% were the major losers on the index.

Asian equity indices were trading in red; Hang Seng down by 0.66%, Taiwan Weighted down by 0.14%, Nikkei 225 down by 1.69% and Straits Times was down by 0.48%. While, Jakarta Composite up by 1.47% was the only gainer amongst Asian pack.

European markets to got off to a tepid start; with CAC 40 losing 0.75%, FTSE 100 dropping 0.66% and DAX tumbling 1.31%