Markets nose-dives to day’s low; trades with loss of over 0.50%

Local equity markets, reversing gears, nose-dived to-day’s low on intense selling pressure which was witnessed after flattish start of European market, which dragged the benchmarks lower over half a percent. On the global front, European shares got off to flat start, though with bit of positive bias as traders waited on the sidelines for the U.S. Federal Reserve to conclude its two-day policy meeting. The Fed is widely expected to cut another $10 billion from its monthly bond purchases, while investors will be watching for any comments on when the Fed would begin to raise interest rates and its outlook for the economy.

Back home, sulking at day’s low, both Sensex and Nifty were languishing below the crucial 25,350 and 7600 levels, with a cut of over 0.50%. Meanwhile, broader indices also falling in tandem with larger peers, were trading with loss of over two tenth of a percent. In the broad-based selling pressure, only stocks from Healthcare counter proved to be exceptions, while rest all of them were down and out in red. Nevertheless, major weakness crept from stocks belonging to Power, Oil & Gas and Information Technology counters, which were the prominent losers of the session. However, Telecom stocks were in demand after Minister of Communications & Information Technology Ravi Shankar Prasad unveiled that his ministry has given in-principle approval for a nation-wide Mobile Network Portability (MNP) and its implementation would begin after the Telecom Regulatory Authority of India (TRAI) submits its recommendations. The overall market breadth on BSE was in the favour of declines which were outnumbering advances in the ratio of 1573:1188; while 97 shares remained unchanged.

The BSE Sensex is currently trading at 25347.9, down by 173.3 points or 0.68% after trading in a range of 25342 and 25609.3. There were 11 stocks advancing against 19 stocks declining on the index.   

The broader indices were trading in red; the BSE Mid cap index was down by 0.21%, while Small cap index down by 0.29%.   

Amidst across the board selling pressure, Power down by 1.01%, Oil & Gas down by 0.97%, IT down by 0.94%, Realty down by 0.74% and PSU down by 0.73% were among top losing indices on BSE. On the flip side, Healthcare up by 0.14% was the lone gainer on BSE sectoral front.

The top gainers on the Sensex were Cipla up by 2.28%, Bharti Airtel up by 0.81%, Hindalco Inds up by 0.8%, Axis Bank up by 0.63% and Dr Reddys Lab up by 0.56%. On the flip side, TCS down by 2.03%, BHEL down by 1.65%, Hero MotoCorp down by 1.54%, Sun Pharma down by 1.37% and RIL down by 1.29% were the top losers.   

Meanwhile, Reserve Bank of India Governor Raghuram Rajan junked the much hyped Financial Sector Legislative Reforms Commission (FSLRC) and described one set of its recommendations, which proposed a unified regulatory framework by merging regulation of trading under a Unified Financial Agency, as 'schizophrenic'. In hard-nosed criticism of the FSLRC report, Rajan termed the committee’s suggestions not only 'schizophrenic', but 'faddish' and 'impressionistic' that had been framed without any deep analysis on the specious ground that this would introduce a system of checks and balances.

According to the governor, creating a Unified Financial Regulatory Agency would take over the work from the RBI in the areas relating to the Bond- Currency- Derivatives nexus, which would adversely impact on the development of these markets. The governor underscored that moving the regulation of bond trading at this time would severely hamper the development of the government bond market, including the process of making bonds more liquid across the spectrum, a process which the RBI is currently engaged in.

Further, Raghuram highlighted the recommendation of appropriate size and scope of regulators as area of concerns. He pointed that while on one hand, the commission emphasizes synergies in bringing together some regulators into one entity, on the other, it suggests breaking up other regulators, with attendant loss of synergies.

Governor pointed these contradictory views by averring FSLRC suggests laws that do not micromanage, give regulators the freedom to fill in the details in consonance with the changing needs of the economy. But, at the same time, expressed the need to check and balance the activities of regulators through judicial oversight. Too much of checks and balances could completely vitiate the flexibility afforded by rewriting laws,' he said.

Lastly, While Rajan was withering in his criticism of the FSLRC’s suggestions to undermine the independence of the financial regulators, he unveiled the monetary policy framework would be guided by RBI deputy governor Urjit Patel’s report in January this financial year.

The CNX Nifty is currently trading at 7594.25, down by 37.45 points or 0.49% after trading in a range of 7593.45 and 7663. There were 18 stocks advancing against 32 stocks declining on the index.   

 The top gainers on Nifty were Cipla up by 2.59%, Kotak Bank up by 2.45%, UltraTech Cement up by 1.36%, Bharti Airtel up by 1.27% and Hindalco Industries up by 0.92%. On the flip side, BPCL down by 2.43%, TCS down by 2.07%, NMDC down by 1.56%, Hero MotoCorp down by 1.54% and Sun Pharma down by 1.42% were the top losers.   

Asian equity indices were trading mixed; Hang Seng up by 0.37%, Straits Times up by 0.19%, Nikkei up by 0.93% and Taiwan Weighted up by 0.43%. While, Jakarta Stock Index down by 0.29% and Shanghai Composite down by 0.55% were the only losers on the index.

European markets after a flat start were now trading positive; with Germany’s DAX rising by 0.37%, France’s CAC 40 gaining by 0.04% and   FTSE 100 trading higher by 0.20%