Weak trade continues on Dalal Street

Local equities added losses to continue their weak trade in the early noon session on account of selling in frontline counters. Besides, a deprecating rupee against the dollar dampened the sentiment. The broader indices too were trading in red. Sentiments remained down-beat with Reserve Bank of India (RBI) Governor Shaktikanta Das’ statement that India's current account and fiscal deficit could take a hit if oil prices continue to rise after an attack on Saudi Arabian oil facilities over the weekend. Some pessimism also crept as private report indicating that lose-monetary policy alone cannot arrest the deepening slump, instead government must take demand-boosting measures, especially in rural areas, by frontloading expenditure primarily through the national rural employment scheme. It also warned that any attempt to trim government spending to maintain the fiscal numbers will be severely detrimental to growth. Losses also extended on fears that a surge in crude prices following attacks on Saudi oil facilities could hurt the economy further.

On the global front, Asian markets were trading mostly in red, as investors assessed heightened geopolitical risks in the aftermath of the strike on Saudi Arabia’s crude production. Back home, farm sector remained in focus with the report that the government has decided not to levy 2 per cent tax deduction at source (TDS) on cash payments of over Rs 1 crore made through Agriculture Produce Market Committees (APMCs).

The BSE Sensex is currently trading at 36888.25, down by 235.06 points or 0.63% after trading in a range of 36830.32 and 37169.56. There were 9 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.28%, while Small cap index was down by 0.15%.

The few gaining sectoral indices on the BSE were Consumer Durables up by 0.63%, FMCG up by 0.25% and Metal was up by 0.08%, while Telecom down by 1.80%, Capital Goods down by 1.07%, Auto down by 0.86%, Oil & Gas down by 0.79% and TECK was down by 0.76% were the top losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 1.65%, Yes Bank up by 1.64%, Hindustan Unilever up by 1.02%, Asian Paints up by 0.96% and ONGC up by 0.31%. On the flip side, Axis Bank down by 2.75%, Bharti Airtel down by 2.27%, Tech Mahindra down by 2.17%, Tata Motors - DVR down by 2.03% and HDFC down by 1.75% were the top losers.

Meanwhile, continuing declining trend for the third consecutive month, the share of foreign portfolio investments (FPI) in domestic capital markets through participatory notes (P-notes) stood at Rs 79,088 crore in August-end. Investments through P-notes has been declining since June, while the month of May had registered an increase over the previous month. P-notes are issued by registered foreign portfolio investors (FPIs) to overseas investors who wish to be a part of the Indian stock market without registering themselves directly after going through a due diligence process.

According to the latest data from the Securities and Exchange Board of India (SEBI), the cumulative value of P-note investments in the domestic markets -- equity, debt, and derivatives -- fell to Rs 79,088 crore till August-end from Rs 81,082 crore in July-end. In June-end, the investment was at Rs 81,913 crore, while it was at Rs 82,619 crore in the end of May and Rs 81,220 crore in April-end.

Out of the total investments made till the end of August, Rs 52,150 crore was invested in the equities segment, Rs 26,259 crore in debt and Rs 678 crore in the derivatives market. The use of P-notes has been on a decline since 2017 and slumped to a nine-and-a-half year low of Rs 66,587 crore in October-end due to gradual measures taken by regulatory bodies to curb the usage of P-notes.

In July 2017, SEBI had notified stricter norms stipulating a fee of $1,000 on each instrument to check any misuse for channelising black money. It had also prohibited FPIs from issuing such notes where the underlying asset is a derivative, except those that are used for hedging purposes. Recently, the board of SEBI has approved a proposal to rationalise the framework for issuance of P-notes -- an instrument once very popular with foreign investors.

The CNX Nifty is currently trading at 10932.90, down by 70.60 points or 0.64% after trading in a range of 10915.15 and 11000.10. There were 15 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 1.58%, Titan Company up by 1.43%, Yes Bank up by 1.27%, Hindustan Unilever up by 1.14% and Asian Paints up by 1.03%. On the flip side, Axis Bank down by 2.72%, Bharti Airtel down by 2.27%, Tech Mahindra down by 2.26%, BPCL down by 2.04% and HDFC down by 1.83% were the top losers.

Asian markets were mostly trading in red; Hang Seng decreased 398.43 points or 1.47% to 26,726.12, Shanghai Composite declined 43.52 points or 1.44% to 2,987.23, Taiwan Weighted dropped 26.77 points or 0.25% to 10,871.36, Straits Times trembled 19.18 points or 0.6% to 3,184.75 and Nikkei 225 slipped 3.04 points or 0.01% to 21,985.25. On the flip side, KOSPI rose 0.02 points or 0% to 2,062.24 and Jakarta Composite was up by 3.65 points or 0.06% to 6,223.09.