Benchmarks make gap down opening on weak global cues

Indian equity Markets made a gap down opening and are trading deeply in red, with Sensex and Nifty trading below crucial 27,850 and 8,450 levels respectively on sustained selling activities by market-participants on weak global cues. The weakness was in the markets was a knee-jerk reaction to the Supreme Court-appointed special investigation team proposal to tighten rules on participatory notes. The recommendations were released following trading hours on Friday and have urged Sebi to ensure that it is able to track the actual beneficiary of the P-Note investments. Rupee opened lower against the dollar on Monday and was trading at 64.07, down 4 paise at the Interbank Foreign Exchange that too kept pressurizing the sentiment. Meanwhile, Investors were keenly eyeing the forthcoming two-day US Fed policy meet beginning Tuesday that is expected to shed some light on the interest rate hike cycle.

In scrip specific development, KDDL was locked in upper circuit of 20% after the SAIL Partners is planning to invest about Rs 30 crore through preferential issue.

On the global front, the US markets ended lower as slowing global growth dragged commodity-related stocks lower, while an earnings-fueled drop in Biogen took down the biotech sector. Asian markets were trading in red as weak Chinese manufacturing accelerated the sell-off in oil and other commodities.

Back home, all sectoral indices are trading in the red. The market breadth on BSE was negative in the ratio of 756: 1120 while 70 scrips remained unchanged.

The BSE Sensex is currently trading at 27804.59, down by 307.72 points or 1.09% after trading in a range of 27804.59 and 28117.65. There were 3 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.72%, while Small cap index lost 0.51%.

While there were no gainers, the top losing sectoral indices on the BSE were Realty down by 1.68%, Bankex down by 1.37%, Capital Goods down by 1.08%, Auto down by 1.05% and Metal down by 0.98%.

The gainers on the Sensex were Cipla up by 0.35%, NTPC up by 0.15% and Reliance Industries up by 0.08%. On the flip side, Tata Motors down by 2.53%, ICICI Bank down by 1.83%, GAIL India down by 1.62%, Tata Steel down by 1.57% and Larsen & Toubro down by 1.43% were the top losers.

Meanwhile, the Supreme Court-appointed special investigation team (SIT) headed by Justice M B Shah (retd)  has recommended enacting tough laws to curb betting in cricket, bring donations to education and religious bodies under tax net, monitoring unusual rise in stock prices and most importantly regulating P-Notes. The SIT suspects that the P-note route is being used for the purpose of tax evasion and has also asked Sebi to compulsorily identify real owners of foreign funds coming through the controversial P-Note route and also prosecute those using equities for tax evasion.

With half of the Rs 2.7 lakh crore overseas investments using P-Notes coming through tax havens of Cayman Islands, Mauritius and Bermuda, the SIT, tasked with curbing black money, urged Sebi to ensure that it is able to track the actual beneficiary of the P-Note investments and called for restrictions on transfer of the instrument. The Securities and Exchange Board of India (Sebi) is likely to review the regulations governing participatory notes (P-notes). Sebi had in the past raised concerns on the misuse of P-notes.The panel has suggested measures to ensure donations by cheques to prevent black money generation in education sector, religious bodies and charities, and sought prosecution of those donating and accepting unaccounted money under the anti-corruption law.  For this, the panel said it would require legislative change which is necessary because now-a-days donation to educational institutions, which are in demand, is rampant.

Regarding present measures taken by the market regulator, the panel has said that it is not enough for Sebi to ban individuals and companies from stock markets and the regulator needs to initiate prosecution proceedings and take all necessary 'preventive and punitive' actions. To prevent misuse of exemption on Long Term Capital Gains (LTCG) tax for money laundering, the panel has suggested a slew of measures such as having an 'effective monitoring mechanism' by Sebi to study such unusual rise of stock prices. 

The CNX Nifty is currently trading at 8435.25, down by 86.30 points or 1.01% after trading in a range of 8429.15 and 8492.20. There were 7 stocks advancing against 43 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 2.46%, Zee Entertainment up by 1.24%, Cipla up by 0.35%, Tata Power up by 0.21% and Bosch up by 0.14%. On the flip side, Tata Motors down by 2.49%, Cairn India down by 2.37%, HCL Tech. down by 2.16%, ICICI Bank down by 1.86% and GAIL India down by 1.69% were the top losers.

Asian markets were trading in red; Hang Seng decreased 589.3 points or 2.35% to 24,539.2, 1Nikkei 225 decreased 213.41 points or 1.04% to 20,331.12, Taiwan Weighted decreased 130.61 points or 1.49% to 8,637.25, Shanghai Composite decreased 99.37 points or 2.44% to 3,971.54, Straits Times decreased 28.78 points or 0.86% to 3,323.87, Jakarta Composite decreased 23.9 points or 0.49% to 4,832.70, KOSPI Index decreased 7.76 points or 0.38% to 2,038.20 and FTSE Bursa Malaysia KLCI decreased 4.68 points or 0.27% to 1,716.08.