Late hour sell-off drags benchmarks into red

Tuesday’s trading session turned out to be a disappointing session of trade for the Indian equity markets, as traders opted to book their initial profits in absence of any major positive trigger. The frontline gauges, after a positive start, remained range-bound for most part of the session and drifted to lower levels in the last leg of trade to settle with cut of about half a percent. Though, the bourses tried to keep their head above water but, the psychological 19,700 (Sensex) and 6,050 (Nifty) levels proved as stern resistances as the key indices could not claw beyond those levels, instead drifted lower. Sentiments got dampened after rate-sensitive banking sector tumbled around a percent after Reserve Bank of India (RBI) said it plans to take early action against banks whose officials were recently caught on tape in a sting operation willing to indulge in serious violation of banking norms.

However, global markets remained firm with European counters opening higher led by chipmaker STMicroelectronics after it guided for full-year order growth. Meanwhile, the sentiments remained up-beat on expectations that the US Federal Reserve would continue its stimulus measures for a longer period. Asian markets too ended higher with Nikkei climbing more than 2 per cent to mark its biggest one-day rise in three weeks on Tuesday, as investors scooped up battered stocks such as financials, which had fallen from recent peaks into bear market territory.

Back home, selling was also seen in Auto space as stocks like Maruti Suzuki and Tata Motors edged lower on reporting weak sales figure for the month of May. Shares from realty counter too ended mostly lower ahead of Union Cabinet meeting in which it will consider a bill to set up a regulator for the real estate sector with provisions for jail term for the developer for putting out misleading advertisements about projects. Additionally, Jewellery stocks viz. PC Jeweller, TBZ and Titan Industries came under pressure towards end of the trade after RBI said that it would extend the restrictions on the import of gold on consignment basis by banks to all nominated agencies and trading houses.

However, losses remain capped as some support came in after select non-banking financial companies which are likely to foray into the banking space gained during the trade after the Reserve Bank of India which had issued final guidelines for issuing new banking licences on February, came up with clarifications to various queries on Monday. The central bank said applicants getting permits to set up new banks would have to do so within 18 months. The earlier guidelines said aspirants would get a year after in-principle approval to do so, failing which the licenses were to be withdrawn. Additionally, shares of footwear retailers viz. Liberty Shoes and Relaxo Footwear edged higher led by over 6% zoom in Bata India after a domestic brokerage initiated coverage on the stock with a buy rating citing strong earnings and growth visibility.

The NSE’s 50-share broadly followed index Nifty declined by about twenty points to end below the psychological 5,950 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by over sixty points to end below its crucial 19,600 mark. However, broader markets outperformed benchmarks and snapped the session slightly in green.

The overall volumes stood above Rs 1.40 lakh crore, which remained on the lower side as compared to that on Monday. The market breadth remained in favor of declines as there were 1,119 shares on the gaining side against 1,215 shares on the losing side while 162 shares remain unchanged.

Finally, the BSE Sensex lost 64.70 points or 0.33% to settle at 19,545.78, while the CNX Nifty declined by 19.85 points or 0.33% to end at 5,919.45.

The BSE Sensex touched a high and a low of 19,742.70 and 19,522.47, respectively. The BSE Mid cap index up by 0.10% and Small cap index was up by 0.27%.

The top gainers on the Sensex were, Dr Reddys Lab up by 1.88%, Cipla up by 1.83%, Wipro up 1.60%, L&T up 1.56% and Mahindra & Mahindra up by 1.13%, while Tata Motors down by 2.34%, SBI down 2.11%, Jindal Steel down 1.98%, HDFC down 1.61% and Sterlite Industries down by 1.40% were the top losers on the index. 

The top gainers on the BSE Sectoral space were, Health Care up 1.88%, Capital Goods up 0.77%, Power up 0.44% and FMCG up 0.31%, while Consumer Durables down 1.34%, Bankex down 0.95%, Realty down 0.86%, Auto down 0.46% and IT down 0.45% were the top losers on the sectoral space.

Meanwhile, disappointing the corporate aspiring for banking licences, the Reserve Bank of India (RBI) said it will look for very high quality applications to issue new bank permits and may not be possible to issue licences to all eligible applicants. Further, on timeline for granting in-principle approval for bank licence, RBI said, it will not be possible to indicate the timeline for grant of in-principle approvals at this stage. Applicants have to submit their applications by July 1 for evaluation to get new bank licences.

The central bank, which had issued final guidelines for issuing new banking licences on February, came up with clarifications to various queries. The RBI has extended the validity of in-principle licence nod from 12 months to 18 months and clarified that the companies which would be eligible to apply must have a public shareholding of at least 51 per cent.

Besides this, the intending applicants would have to approach other regulators to bring in entities regulated by them under the bank holding company. The RBI’s notification further said that only non-financial services companies and non-operative financial holding companies in the promoter Group would be allowed to hold shares in the holding company.

Further, the central bank added that it has received 443 queries from 34 individuals/organizations and most of the queries it received pertained to provisions on eligible promoters, 'fit and proper' criteria, foreign shareholding, regulatory requirements, on transition time to the new structure and corporate structure of the NOFHC among others. 

The CNX Nifty touched a high and low of 5,981.60 and 5,910.25 respectively. 

The top gainers on the Nifty were Ranbaxy up by 4.22%, Dr Reddy up 2.52%, Cipla up 2.42%, Lupin up 2.03% and L&T up by 1.78%.

On the flip side, the top losers of the index were, Tata Motors down 2.53%, Axis Bank down 2.51%, Sesa Goa down 2.21%, SBI down 2.07% and Ambuja Cement down by 1.91%.

The European markets were trading in green, France’s CAC 40 up by 0.32%, Germany’s DAX up by 0.18% and the United Kingdom’s FTSE 100 up by 0.53%.

Asian markets end mostly higher on Tuesday, as weak US data weighed on investors’ buying sentiments. Japan’s Nikkei went home with green mark and enjoyed a bounce after the previous day's tumble, as investors scooped up battered stocks such as financials, which had fallen from recent peaks into bear market territory. Shanghai shares closed lower, weighed down by realty stocks.