Post Session: Quick Review

The Indian markets were butchered badly; making it a maniac Monday, panic selling was across the board from the very beginning and stopped only with the closing bell. Bulls never came into picture and bears were in absolute command of the markets from the start, mirroring the global rout. It was one way slide with not even a single incident of resistance. All across there was red on the street, with major bourses continuously losing their various support levels, while the bluechips dragged the benchmarks, the broader markets too were not spared and suffered even sharper cuts than the benchmarks. The selloff in the rupee too weighed on the domestic markets the rupee slumped to its lowest since September 2013, adding to the panic of the investors, as the depreciation in the rupee hits foreign investors and diminishes their returns. Traders even overlooked Reserve Bank of India Governor Raghuram Rajan’s statement, who said the central bank will not have any “hesitation” in using foreign exchange reserves to reduce currency volatility. Rajan said that relative to other countries India is in a good position with strengthening growth, a low current account deficit and narrowing fiscal deficit, moderating inflation, low short term foreign currency liabilities and very size-able exchange reserves relative to imports and liabilities.

There was sea of red across the global markets and after the sharp plunge in the US markets on Friday, the Asian markets followed the rout, with the main culprit being the Chinese markets which plunged to its lowest level since March. The Shanghai Composite Index tumbled 8.5 percent at the close to erase its gains for the year. The European stocks were not far behind and made a weak start, with markets in the region tumbling for a fourth day.

Back home, markets never got a breather after getting a sharp gap down opening and whenever there was any sign of stabilization, it was followed by more intensified selling, and finally the trading hours closing came to rescue to the plunging markets. Traders were completely engrossed in global development and no one bothered about RBI governor trying to calm the markets. Finance Minister Arun Jaitley attributing the stock market crash to global turbulence, said that the government and the Reserve Bank of India (RBI) were watching the situation and hoped that things will stabilize once the transient impact is over. All the sectoral indices remained in red along with the major bourses and the metal stocks too suffered despite FM stating that the nation's steel sector needs to be strengthened and preserved, as consumption of the product will increase with the Indian economy growing. Jaitley said that adverse global cues in the steel sector are only a transient trend, and India has the strength to withstand global challenges.

The BSE Sensex ended at 25649.32, down by 1716.75 points or 6.27% after trading in a range of 25624.72 and 26730.40. All 30 stocks ended in red on the index. (Provisional)

The broader indices suffered deeper cuts; the BSE Mid cap index was down by 7.93%, while Small cap index plunged by 8.81%. (Provisional)

The top losing sectoral indices on the BSE were Realty down by 11.72%, Oil & Gas down by 9.68%, INFRA down by 8.74%, PSU down by 8.17%, Power down by 8.06%. (Provisional)

The top losers on the Sensex were Vedanta down by 15.15%, Tata Steel down by 14.01%, GAIL India down by 13.74%, ONGC down by 11.12% and Hindalco down by 10.52%.(Provisional)

Meanwhile, a Reserve Bank of India (RBI) panel headed by RBI Deputy Governor R. Gandhi has recommended conversion of Urban Cooperative Banks (UCBs), which have revenue of more than Rs 20,000 crore into regular banks. The panel recommended that the concept of Board of Management put forward by the Malegam Committee has to be one of the licensing conditions for new UCBs and expansion of existing ones.

The panel said that in order to minimise the systemic risk, the committee has recommended that large UCBs convert themselves into commercial banks. While making recommendations it further said that the objective was allowing UCBs to grow and proliferate further for financial inclusion. Though, the panel has also clarified that the conversion will not be compulsory for large UCBs and they can continue the way they operate currently in terms of balance sheet or asset size.

It said that if they do not convert, large UCBs will be subject to regulatory guidelines which stipulate that the types of businesses they undertake remain within the limits of plain vanilla products and services, limiting growth prospects. The panel has further said that smaller UCBs with business size of less than Rs 20,000 crore who are willing to convert to Small Finance Banks can apply to the Reserve Bank for conversion. The RBI has also suggested that licenses may be issued to financially sound and well-managed cooperative credit societies having a minimum track record of five years to operate as UCBs.The RBI has invited suggestions and comments from public on this report by September 18.

The CNX Nifty ended at 7798.95, down by 501.00 points or 6.04% after trading in a range of 7769.40 and 8060.05. 49 stocks ended in red, while one stock ended unchanged on the index. (Provisional)

The top losers on Nifty were Vedanta down by 14.85%, GAIL India down by 14.16%, Tata Steel down by 13.80%, Cairn India down by 13.20% and ONGC down by 10.92%.(Provisional)

The Asian markets closed in red on Monday, with China’s Shanghai Composite index posting its biggest one-day percentage loss since 2007, as fears surrounding the health of China's economy multiplied. Japanese Prime Minister Shinzo Abe stated that it was acceptable for the Bank of Japan to miss its self-imposed deadline to meet its inflation target, suggesting that the government was in no mood now to pressure the central bank to expand monetary stimulus. Consumer inflation has ground to a halt mainly due to the effect of slumping oil prices, keeping the BOJ under pressure to do more to meet its pledge - made in April 2013 - to accelerate inflation to 2% in roughly two years. Abe expressed confidence that Japan’s economy remained on a solid recovery path adding that with oil prices continuing to fall, the BOJ missing the two-year deadline could not be helped. Singapore’s core inflation edged higher in July, but growing uncertainty about the outlook for growth and prices was seen likely to keep open the possibility of further monetary easing. The core inflation gauge rose 0.4% in July from a year earlier, higher than the median forecast of a steady 0.2% year-on-year forecast in a survey. Taiwanese Industrial Production fell to a seasonally adjusted annual rate of -2.99%, from -1.35% in the preceding month.