Post Session: Quick Review

Indian markets after surging to their fresh record highs went through trepidation on Tuesday with benchmarks losing ground in the very morning session and struggling throughout the day to hold losing ground. In the very early hours sharp selling dragged the Nifty below its crucial 8500 mark and there after trade turned range bound with Nifty struggling to even get near that level. Market seemed reacting negatively to SEBI alignment of norms for issue of Offshore Derivative Instruments or P-Notes with foreign portfolio investors regime amid concerns about possible misuse.

The global cues too were not very supportive and despite a flat but positive close of the US markets, the Asian markets remained cautious and some of the major indices even ended in red, though the Japanese stocks rallying after a holiday gained about half a percent for the day. The starting mixed signals from the European markets opening, too weighed on the domestic markets though they bounced back after Germany avoided recession after it grew in last quarter backed by rise in household spending.

Back home, the market mood turned somber with the progress of the day and remained in red for whole second half of trade, there was sharp selling pressure in the late trade taking the major indices to their intraday low, though final hour witnessed some recovery that helped the markets to cover up some of their losses but still they posted considerable losses for the day. The cigarette and tobacco stocks witnessed sudden slump after the Ministry of Health & Family Wefare said that an expert panel constituted by it had, inter alia, recommended prohibition on sale of loose or single sticks of cigarettes. It had also recommended an increase in the minimum legal age for the sale of tobacco products, increasing the fine or penalty amounts of violation of certain provisions of the Cigarettes and Other Tobacco Products. The Ministry has accepted the recommendations of the committee and a draft note for Cabinet has been circulated for inter-Ministerial consultation. Reacting to the news ITC lost around 5%, Godfrey Philips slumped by 9% and Golden Tobacco was lower by over 6%. All the sectoral indices on the BSE ended in red, except oil & gas which ended with modest gains.

The BSE Sensex ended at 28338.05, down by 161.49 points or 0.57% after trading in a range of 28217.50 and 28541.22. There were 16 stocks advancing against 14 stocks declining on the index.(Provisional)

The broader indices ended iin red; the BSE Mid cap index was down by 1.43%, while Small cap index slumped by 2.32%.(Provisional)

The lone gaining sectoral index on the BSE was Oil & Gas up by 0.57%, while, Realty down by 3.35%, FMCG down by 2.53%, Power down by 1.62%, INFRA down by 1.60%, Consumer Durables down by 1.45% were the major losing indices on BSE.(Provisional)

The top gainers on the Sensex were BHEL up by 2.87%, Hindustan Unilever up by 2.25%, ONGC up by 1.52%, Cipla up by 1.42% and HDFC up by 1.28%. On the flip side, ITC down by 5.18%, Tata Steel down by 2.25%, Axis Bank down by 1.99%, ICICI Bank down by 1.97% and Larsen & Toubro down by 1.96% were the top losers.(Provisional)

Meanwhile, amid concerns over increasing misuse of Offshore Derivative Instruments (ODI) or P-Notes for money laundering and other such purposes, the Securities and Exchange Board of India (SEBI) has notified that foreign portfolio investments coming in through ODI route will now be aligned with the eligibility and investment norms applicable to foreign portfolio investors (FPI).

P notes used by investors or hedge funds that are not registered with the Securities and Exchange Board of India to invest in Indian through registered foreign institutional investors. Any dividends or capital gains collected from the underlying securities go back to the investors.The investments through P-Notes in India rose to nearly seven-year high of over Rs 2.65 lakh crore by the end of October 2014.

SEBI clarified that an FPI shall issue ODIs only to those subscribers which meet the eligibility criteria as laid down in SEBI’s FPI Regulation 4 which stated that an FPI applicant shall not be granted registration unless the entity is the resident of a country whose securities market regulator is a signatory to International Organization of Securities Commission’s (IOSCO). SEBI further clarified that investment restrictions applicable to foreign portfolio investors would also apply to ODIs. Two or more ODI subscribers having common Beneficial Owner (BO) will be considered together as a single ODI subscriber, in the same manner as is being done in the case of FPIs.

Further, the market regulator noted that foreign portfolio investor or FPI can issue ODIs, which predominantly comprise of participatory notes (P-notes), only to those subscribers that do not have an opaque structure. Foreign funds with 'opaque' structures would not be allowed to come in under the new FPI regime.

The CNX Nifty ended at 8463.10, down by 67.05 points or 0.79% after trading in a range of 8429.45 and 8535.35. 17 stocks advanced against 33 declining ones on the index.(Provisional)

The top gainers on Nifty were BHEL up by 3.05% and Zee Entertainment up by 2.21% and Hindustan Unilever up by 2.08% and ONGC up by 1.46% and Dr. Reddys Lab up by 1.45%. On the flip side, ITC down by 5.21%, NMDC down by 3.80%, DLF down by 3.76%, Kotak Mahindra Bank down by 3.27% and IDFC down by 2.98% were the top losers.(Provisional)

European markets recovered after a slow start, UK’s FTSE 100 increased by 7.45 points or 0.11% to 6,737.24, France’s CAC was higher by 17.91 points or 0.41% to 4,386.35 and  Germany’s DAX was up by 83.26 points or 0.85% to 9,868.80.

Asian markets ended mostly in green on Tuesday, with Japanese stocks rising amid optimism global central banks will take more steps to support growth. Moreover, Central bank governor Haruhiko Kuroda said in a speech that policy makers are committed to achieving its 2 percent inflation target as well as ample liquidity also aiding sentiments. The Chinese Shanghai Composite climbed on speculation that the government will extend cuts in interest rates and accelerate state-owned enterprise reform to support the economy. PBOC Governor Zhou Xiaochuan has overseen two tightening and two easing cycles for a total of 22 moves to the one-year lending rate and 20 to the one-year deposit rate.