Markets trade in red; Nifty slips below 7,850 mark

Markets have made a negative start and were trading lower in early deals, after gaining over half a per cent in last session. Sustained selling by market participants dragged both the Sensex and Nifty below their psychosocial 25,550 and 7,850 levels respectively.  The US markets closed mostly lower overnight as Apple shares skidded to a two-year low on concerns about iPhone demand, while Asian markets were trading mostly in red following the lackluster cues from Wall Street and as crude oil prices once again slipped after rising to a fresh six-month high overnight, that dampened sentiments. On the domestic front, weak macroeconomic data weighed down sentiments. Retail inflation, as measured by the consumer price index (CPI) for April accelerated to 5.39% as compared to 4.83% in March, while India's industrial output rose by 0.1 per cent in March, largely losing the momentum generated in February when it had risen by two per cent, after a three-month fall. Besides, rupee opened lower against the dollar on Friday and was trading at 66.79, down 17 paise at the Interbank Foreign Exchange that too kept pressurizing the markets.

In the scrip specific development, Eicher Motors dropped 7 per cent on the NSE in early morning trade after more than 4% of the total equity capital of the company changed hands in the counter through a block deal.

All the sectoral indices on the BSE were reeling under pressure led by Metal, Bankex, TECK and Auto. The market breadth on BSE was negative in the ratio of 554: 935 while 74 scrips remained unchanged.

The BSE Sensex is currently trading at 25525.35, down by 264.87 points or 1.03% after trading in a range of 25516.01 and 25743.69. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.26%, while Small cap index lost 0.23%.

The top losing sectoral indices on the BSE were Metal down by 1.34%, Bankex down by 1.08%, TECK down by 0.93%, Auto down by 0.89% and IT down by 0.82%, while there were no gainers. 

The top gainers on the Sensex were Tata Motors up by 0.46%, Asian Paints up by 0.31%, Adani Ports &Special up by 0.28% and Cipla up by 0.14%. On the flip side, ICICI Bank down by 2.18%, Bharti Airtel down by 1.79%, Dr. Reddys Lab down by 1.78%, Hindustan Unilever down by 1.75% and GAIL India down by 1.62% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) tweaking the norms, has issued new guidelines on ownership in private sector banks by bundling shareholding patterns into two broad categories of individuals (natural persons) and legal entities/institutions, but retained the cap on foreign ownership at 74%.

The central bank reviewed the extant guidelines on ownership in private sector banks which envisaged diversified shareholding in private sector banks by a single entity/corporate entity/group of related entities. The revision in the guideline were against the background of the guidelines on licensing of new banks in the private sector issued in February 2013, the need for additional capital for the banks consequent to the implementation of Basel III capital regulations and to rationalise the ownership limits. It has stipulated the different principles for shareholding by promoters, other entities and individuals in private sector banks after the review.

As per the guidelines notified by the RBI, the permitted promoter/promoter group shareholding for all existing banks will be in line with what has been permitted in the February 22, 2013 guidelines on licensing of universal banks at 15%. In case any promoter/promoter group is eligible for higher shareholding as per the licensing guidelines, the same will apply and the limits prescribed for all shareholders in the long run will not apply.

Other features of the guidelines says that 'fit and proper' criterion for acquisition of shareholding in a private bank beyond 5% will continue to apply. Acquisition of shareholding in a private sector bank by foreign entities will continue to be subject to the extant FDI policy, and the aggregate foreign ownership through FDI, FII/NRIs cannot exceed 74% of paid-up capital. At all times, at least 26% of the paid-up share capital of the private sector banks will have to be held by resident Indians. In banks where there are no major regulatory/supervisory concerns, a person may be permitted to acquire higher shareholding, if the same is supported by the Board of the Directors of the concerned bank. Where specific orders have been passed by the Reserve Bank relating to dilution of shareholding by persons/entities/groups, those orders will continue to apply for such shareholding. Also, that where any promoter/promoter group has shareholding in excess of 15 per cent and timelines have already been stipulated by the Reserve Bank for bringing it down to 10 per cent, such timelines shall continue to apply for bringing the shareholding down to 15 per cent.

The CNX Nifty is currently trading at 7827.50, down by 72.90 points or 0.92% after trading in a range of 7820.20 and 7881.00. There were 7 stocks advancing against 44 stocks declining on the index.

The top gainers on Nifty were HCL Tech. up by 0.84%, Tata Motors up by 0.50%, Idea Cellular up by 0.40%, Adani Ports &Special up by 0.26% and BPCL up by 0.19%. On the flip side, Eicher Motors down by 3.45%, ICICI Bank down by 2.07%, Hindustan Unilever down by 1.88%, Hindalco down by 1.82% and Bharti Airtel down by 1.75% were the top losers.

Asian markets were trading mostly in red, Hang Seng decreased 185.71 points or 0.93% to 19,729.75, Nikkei 225 decreased 148.49 points or 0.89% to 16,497.85, Taiwan Weighted decreased 93.94 points or 1.16% to 8,014.11, Jakarta Composite decreased 22.6 points or 0.47% to 4,780.72, FTSE Bursa Malaysia KLCI decreased 19.83 points or 1.2% to 1,629.15 and KOSPI Index decreased 11.74 points or 0.59% to 1,965.75.

On the flip side, Shanghai Composite increased 1.15 points or 0.04% to 2,837.02.