Benchmarks add losses; Nifty slips below 8000 mark

Indian bourses adding losses, continued to trade in red in the late morning session, with the Sensex losing over 1000 points and Nifty falling below the 8000 level, on back of weak global cues, with China’s benchmark index Shanghai composite plunging over 9% after the Wall Street crashed on the Friday owing to concerns over economic slowdown in China, the world’s second largest economy. The broader markets are also facing the heat, with the midcap index plunging by 4.4 percent and the smallcap index shedding 4.8 percent.  Sentiment on the street weakened further on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 2,341 crore on August, 21, 2015. Investors failed to get any sense of relief from central bank Governor Raghuram Rajan’s statement that India is in a good position compared with other emerging markets due to strengthening economic growth, moderating inflation, low short-term currency liabilities and a narrowing fiscal deficit. He also added that India will use its foreign-currency reserves to stem rupee volatility as stocks and currencies fall around the globe.

Back on street, Asian shares and commodities weakened further as fears spread that a more severe slowdown in China would pull down other economies in the region, denting energy and raw material consumption. Furthermore, US shares recorded their worst single day fall in four years on the back of economic slowdown in China. Back home, Indian rupee plunged by 66 paise to fall below the Rs 66 level against the dollar for the first time in almost two years in early trade on sustained capital outflows even as the US currency weakened overseas.

Back on street, all sectoral indices were in the red with Realty, Power and Oil & Gas indices among the top losers. Index heavyweights Reliance Industries, Infosys and HDFC were among the top Sensex losers along with capital goods shares. Moreover, metal stocks weakened on worries over lower demand amid sluggish growth in China, the world's largest consumer. In scrip specific development, shares of Unitech have tumbled after the company reported 47.49% fall in sales bookings in Q1FY16 to Rs 178 crore as compared to Rs 339 crore in the year-ago period. On the other hand, shares of Astra Microwave have gained after the company signed a Term Sheet for formation of Joint Venture Company (JVC) with Rafael Advanced Defence Systems, Israeli for joint production and supply of Tactical Radio Communication systems, Electronic war-fare systems and Signal intelligence systems.

The market breadth on BSE was negative, out of 2281 stocks traded, 212 stocks advanced, while 2040 stocks declined on the BSE. 

The BSE Sensex is currently trading at 26299.48, down by 1066.59 points or 3.90% after trading in a range of 26255.41 and 26730.40. There were 0 stocks advancing against 30 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 4.46%, while Small cap index down by 4.84%.

The top losing sectoral indices on the BSE were Realty down by 6.19%, Power down by 5.20%, Oil & Gas down by 5.12%, Bankex down by 5.03% and infrastructure down by 5.01%, while there were no gainers in the space

The top losers on the Sensex were BHEL down by 6.91%, GAIL India down by 6.90%, ONGC down by 6.23%, Tata Motors down by 6.03% and Vedanta down by 6.02%, while there were no gainers in the index.

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 is currently trading at 7958.60, down by 341.35 points or 4.11% after trading in a range of 7958.00 and 8060.05. There were 0 stocks advancing against 50 stocks declining on the index.

The top losers on Nifty were PNB down by 7.59%, BHEL down by 7.19%, Yes Bank down by 7.10%, Bank of Baroda down by 6.99% and GAIL India down by 6.97% while there were no gainers in the index.

Asian markets were trading in red; Hang Seng was down by 4.79%, Nikkei 225 down by 4.13%, Taiwan Weighted down by 3.41%, Shanghai Composite down by 8.47%, Jakarta Composite down by 4.37%, Straits Times down by 3.48%, KOSPI Index down by 3.16% and FTSE Bursa Malaysia KLCI down by 1.77%.