Sensex plunges over 250 points; Nifty below 5800 mark

Indian equity markets extended early losses in the late morning session on Wednesday amid sustained selling across the counters. The S&P BSE Sensex opened gap-down on Wednesday and plunged over 250 points in late morning session, while Nifty slipped below its key psychological level of 5800. Markets were upset amid fears that the current account deficit will widen because of a falling rupee and rising crude oil prices. Asian markets weakness and worries about the political unrest in Egypt were also weighing on the market. In currency market, rupee slipped past the 60 a dollar mark, on heavy dollar demand from banks and importers. Market participants were waiting for the potential intervention from the Reserve Bank of India and government, as they are worried about the possibility that foreign investors will continue to exit domestic markets and add concerns about the funding of the country's record current account deficit (CAD). On sectoral front, metal stocks were down sharply amid lingering worries about a slowdown in China. Realty, PSU, bank, capital goods and power stocks too were mostly trading lower, while select FMCG stocks were up.

On the global front, Asian markets were trading lower, as investor sentiments were dampened on China's services sector data, closely following disappointing numbers about the country's manufacturing sector, which pointed toward a continuing slowdown in the world’s second-largest economy. Back home, the market breadth was favoring negative trend; there were 610 shares on the gaining side against 1,296 shares on the losing side, while 98 shares remained unchanged.

The BSE Sensex is currently trading at 19,205.09, down by 258.73 points or 1.33% after trading in a range of 19347.11 and 19185.46. There were 2 stocks advancing against 27 declines on the index and one remained unchanged.

The broader indices were also trading on red; the BSE Mid cap index was down by 1.49% and Small cap index was down by 1.09%.

The only gaining sectoral index on the BSE was, FMCG up by 0.38%, while Realty down by 3.86%, Metal down by 3.24%, PSU down by 2.40%, Capital Goods down by 2.33% and Power down by 2.18% were the top losers on the BSE.

The top gainers on the Sensex were, Hindustan Unilever up by 0.43% and ITC up by 0.29%. On the flip side, Sterlite Industries was down by 4.13%, Tata Steel was down by 4.00%, Hindalco Industries was down by 3.90%, BHEL was down by 3.65% and SBI was down by 3.56% were the top losers on the Sensex.

Meanwhile, in a move to address concerns of foreign retailers, the government is considering to alter FDI policy in retail sector to allow global retailers like Walmart and Tesco to open multi-brand stores in non-hilly cities with population less than one million. As per the current retail FDI policy, foreign retailers are allowed to open stores only in cities with a million-or-over population. However, these retailers want to open stores in cities with population less than a million, saying that it is important to spread network and to make their business viable.

Further, the Department of Industrial Policy and Promotion (DIPP) may also accept the other demands of retailers to relax mandatory investment norm in the back-end infrastructure, sourcing conditions and definition of MSMEs. Recently, retailers sought clarifications on sourcing issue in which foreign retailer must source 30 per cent of the items that it sells in India from small industries. They also asked for a relaxation in the rules for investment in the back-end infrastructure as the current policy says that 50 per cent of first tranche of the mandatory minimum $100 million FDI must go in the back-end infrastructure and not in buying land and building.

The government had already held a meeting with retail industry to solve issues in retail foreign direct investment (FDI) norms. The government has permitted 51 per cent FDI in multi-brand retail about nine months back, but it has been met with a lukewarm response, as investors consider the pros and cons of entering a complex market rife with regulatory hurdles. No formal proposal has been received by the DIPP yet as it has imposed many conditions on such investment, which created confusion among the foreign retailers regarding multi-brand guidelines.

The CNX Nifty is currently trading at 5,774.90 down by 82.65 points or 1.41% after trading in a range of 5,815.00 and 5,769.65. There were 4 stocks advancing against 45 declines on the index and one remained unchanged.

The top gainers of the Nifty were Lupin up by 1.91%, HUL up by 0.52%, HCL Technologies up by 0.38% and ITC up by 0.31%. On the flip side, JP Associate down by 7.14%, Bank of Baroda down by 6.63%, IDFC down by 5.94%, PNB down by 4.44% and Sesa Goa down by 4.40% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined 1.10%, Hang Seng contracted 1.68%, Jakarta Composite decreased 1.78%, Straits Times dropped 1.06%, KOSPI Composite shed 1.64%, Taiwan Weighted was down by 1.30% and Nikkei 225 was down by 0.31%.

On the flip side, KLSE Composite was trading higher by 0.14%.