Benchmarks make gap down opening ahead of the RBI policy

With a gap down opening Indian equity markets have extended their last session’s losses and are now trading with the cut of around a percent, which dragged both Sensex and Nifty below psychologically crucial 25,400 and 7,750 levels, on account of sustained selling activities by market-participants. Weakness in the global equities weighed amid worries about the health of Chinese economy after China's industrial profits fell 8.8% in August. Foreign portfolio investors (FPIs) sold shares worth a net Rs 650.01 crore on September 28, 2015, as per provisional data released by the stock exchanges, also added to the negative milieu. Cautiousness prevailed ahead of the Reserve Bank of India's fourth bi-monthly monetary policy review for the year 2015-16 which is scheduled later in the day. Most of the sectoral indices on BSE were trading in red, with prominent losers being the stocks from Bankex, Realty, Metal, Oil & Gas and Power counters. On the flip side, stocks from IT counter were the only gainer.

On the global front, the US markets ended lower as investors remainedworried about the health of China's economy and its potential impact on the timing of a US interest rate increase. The Asian markets were trading mostly in red following the negative cues overnight from Wall Street and European markets amid mounting concerns about the health of the Chinese economy. In addition, weaker commodity prices dragged down resource stocks.

Closer home, shares of interest rate-sensitive sectors such as banking, real estate and autos were trading lower ahead of the Reserve Bank of India (RBI) policy review at 11 am today. The market breadth on BSE was negative in the ratio of 463:1114 while 60scrips remained unchanged. 

The BSE Sensex is currently trading at 25362.31, down by 254.53 points or 0.99% after trading in a range of 25307.94 and 25496.38. There were 2 stocks advancing against 28 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.98%, while Small cap index lost 0.86%.

The gaining sectoral indices on the BSE was IT up by 0.06%, while Bankex down by 1.77%, Realty down by 1.63%, Metal down by 1.28%, Oil & Gas down by 1.21% and Power down by 1.19% were the losing indices on BSE.

The top gainers on the Sensex were Coal India up by 0.79% and Infosys up by 0.31%. On the flip side, Vedanta down by 4.28%, ICICI Bank down by 3.00%, Bharti Airtel down by 2.95%, Axis Bank down by 2.49% and Tata Steel down by 2.22% were the top losers.

Meanwhile, Finance Minister Arun Jaitley has said that the government is open to dilute its stake in public sector banks to 52 per cent. He said that “We are willing to look at all other changes including bringing down government equity to 52 per cent (in state-run banks), and therefore giving additional financial strength and teeth to the banking institutions themselves”.

Jaitley who was addressing the 68th Annual General Meeting of Indian Banks Association, also said the state-run lenders need to be given independence and should be kept away from any political interference. He added that even Prime Minister Narendra Modi has said that no bank should ever receive formal or informal directives from the government and had advised the banks to operate essentially and exclusively on banking considerations.

The FM said that government would also consider other issues including problems tied to distressed state power providers. He further stated that our distribution networks through the national grids have improved, but the final access is by the state discoms and at the level of state discoms reforms have been carried out in very few states. He further said that RBI has put those state governments on notice that if they do not charge adequately and make users pay for the power supplied the banking system at its own peril cannot continue to support them.

In the major public sector banks, the government owns over 59 per cent stake in largest public sector lender SBI, 76.5 per cent stake in IDBI Bank, nearly 64.5 per cent equity in Canara Bank, in excess of 59 per cent n Punjab National Bank, in Bank of Baroda, the government holds 57.5 per cent, in Allahabad Bank over 60 per cent, 61 per cent in Andhra Bank, 64.4 per cent in Bank of India and 81.5 per cent in Central Bank of India.

The CNX Nifty is currently trading at 7720.70, down by 75.00 points or 0.96% after trading in a range of 7700.90 and 7728.35. There were 5 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were Coal India up by 0.96%, HCL Tech. up by 0.79%, Infosys up by 0.57%, Tech Mahindra up by 0.06% and Mahindra & Mahindra up by 0.03%. On the flip side, Vedanta down by 4.22%, Adani Ports &Special down by 3.30%, ICICI Bank down by 2.93%, Axis Bank down by 2.80% and Idea Cellular down by 2.80% were the top losers.

Asian markets were trading mostly in red, Hang Seng decreased 741.87 points or 3.5% to 20,444.45, Nikkei 225 decreased 593.36 points or 3.36% to 17,051.75, Shanghai Composite decreased 56.91 points or 1.84% to 3,043.85, Jakarta Composite decreased 50.5 points or 1.23% to 4,070.00, Straits Times decreased 41.33 points or 1.48% to 2,750.59 and FTSE Bursa Malaysia KLCI decreased 9.8 points or 0.61% to 1,598.63.

On the flip side, Taiwan Weighted increased 9.25 points or 0.11% to 8,132.35.