Markets continue to reel deep in red; Nifty below 8000

Markets are not looking of coming out of the gloom anytime soon, with both the benchmarks still reeling in deep red, lower by over 3.5 percent. Sensex has suffered its biggest ever intraday fall of over 1100 points on heavy selling by funds, impacted by the Chinese slump. Overseas investors have pulled out nearly Rs 2,000 crore from the Indian stock markets since the beginning of August. Traders were also concerned about the turmoil in the currency market after rupee hit its fresh two years low. Traders even overlooked Reserve Bank of India Governor Raghuram Rajan’s statement, who said that RBI will not hesitate to use reserves to reduce rupee volatility. He also said that RBI will look at emerging room for more accommodation. The sell-off in the US markets on Friday followed by the slump in the Asian markets today has made the investors nervous of investing in risky assets like equity at a time of minimal earnings growth. Back on street, broader markets are performing even worse, while none of the sectoral indices are showing any resistance, with power and realty suffering the most.

The BSE Sensex is currently trading at 26369.18, down by 996.89 points or 3.64% after trading in a range of 26212.91 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 3.92%, while Small cap index plunged by 4.69%.

The losing sectoral indices on the BSE were Realty down by 5.75%, Power down by 5.22%, INFRA down by 5.04%, Oil & Gas down by 4.92%, Bankex down by 4.59%.

The top losers on the Sensex were GAIL India down by 6.51%, BHEL down by 6.41%, ONGC down by 6.25%, Bajaj Auto down by 6.16% and Vedanta down by 6.07%.

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 7988.80, down by 311.15 points or 3.75% after trading in a range of 7940.75 and 8060.05. There were 0 stocks advancing against 50 stocks declining on the index.

The top losers on Nifty were GAIL India down by 6.66%, Yes Bank down by 6.66%, BHEL down by 6.53%, Cairn India down by 6.39% and ONGC down by 6.35%.

The Asian markets were trading in red, Hang Seng slumped by 1029.98 points or 4.6% to 21,379.64, Nikkei 225 declined by 895.15 points or 4.61% to 18,540.68, Taiwan Weighted lost 376.58 points or 4.84% to 7,410.34, Shanghai Composite plunged by 269.05 points or 7.67% to 3,238.69, Jakarta Composite declined by 189.57 points or 4.37% to 4,146.38, Straits Times lost 103.45 points or 3.48% to 2,867.56, KOSPI Index down by 46.26 points or 2.47% to 1,829.81 and FTSE Bursa Malaysia KLCI decreased by 27.93 points or 1.77% to 1,546.74.