Benchmarks slip to intra-day low; Sensex briefly breaches 20,000 level

Trading near day’s low, Indian equity markets continued to reel under pressure, with both Sensex and Nifty, witnessing heavy losses of over one and half percent. Accentuated selling pressure in banking stocks as a result of RBI’s latest move to tighten rupee liquidity, which lowered the amount banks can borrow or lend under its daily liquidity window, mainly hit the sentiment at D-street. While, Sensex is trading above the crucial 20,000 level after briefly breaching it, Nifty is trading above 5950 level, which has turned out to be its strong support level. Broader indices too were witnessing nasty laceration and are trading with cut of around a percent and half.

However, positive start of European markets could limit the downtrend of the bourses. On the global front, European stocks advanced as companies like Volvo AB and EasyJet Plc released financial results.

Closer home, besides banking, stocks from Information Technology and Technology counters were only performing counters. The stocks performed well despite Rupee’s appreciation against greenback after reduction of the liquidity adjustment facility (LAF) for each bank from 1 per cent of the total deposits to 0.50%, thus limiting the access to borrowed funds from the central bank. The overall market breadth on BSE is in the favour of declines which thumped advances in the ratio of 1455:519; while 118 shares remained unchanged

The BSE Sensex is currently trading at 20007.03, down by 295.10 points or 1.45% after trading in a range of 20,252.70 and 19994.25. There were 8 stocks advancing against 22 declines on the index.

The broader indices were trading in red; the BSE Mid cap and Small cap indices were trading lower by 1.97% and 1.42% respectively.

The top gaining sectoral indices on the BSE were, Information Technology up by 0.99%, TECk up by 0.90%, while Bankex down by 4.91%, Capital Goods down by 3.04%, Metal down by 2.56%, Realty down by 2.19% and PSU down by 2.07% were the top losers on the BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.17%, TCS up by 2.17%, Wipro up by 1.18%, Sun Pharma up by 0.80% and Infosys up by 0.63%. On the flip side, Jindal Steel down by 4.18%, Sterlite Industries down by 4.02%, ICICI Bank down by 4.01%, HDFC Bank down by 3.76% and L&T down by 3.51% were the top losers on the Sensex.

Meanwhile, fearing that entry of foreign retail giants will create joblessness, the Parliamentary Standing Committee on Industry has recommended the formation of a ‘Retail Regulatory Authority’ to not only monitor the entry of foreign chains through foreign direct investment (FDI),  but also to assess the impact of FDI on medium, small and micro enterprises (MSME).

As per the DMK leader Tiruchi Siva and Chairman of the Parliamentary Standing Committee on Industry, if multi-brand retail chains are not regulated well, it will impact medium, small and micro enterprises (MSMEs), farmers and domestic mandis.  Siva further stated that the multi-brand chains should be regulated, so that customers are not cheated and farmers are not under-paid for their produce.

Meanwhile, the panel also found the condition of self-certification in respect of 30% sourcing norm unsupportive to the MSME sector and urged the government that an auditor should specifically certify the declaration. While allowing 51% FDI in multi-brand retailing, the government made it mandatory for at least 30% of the value of manufactured or processed products to be sourced from small industries.

Further, the panel also suggested the MSME ministry to commission a survey to assess the benefit and losses of previous FDI policies on the MSME sector, to ascertain if they have created any back-end infrastructure, imparted skills to domestic manpower or upgraded managerial skills, as is being envisaged in the current FDI policy.

Ironically, no multi-national company has approached the government to set up stores in India, since the approval of 51 percent FDI in multi-brand retailing in September.

The CNX Nifty is currently trading at 5,967.00, down by 110.80 points or 1.82% after trading in a range of 6,047.25 and 5,962.75. There were 9 stocks advancing against 41 declines on the index.

The top gainers of the Nifty were Bharti Airtel up by 2.15%, TCS up by 1.71%, Sun Pharmaceuticals up by 0.77%, Infosys down by 0.62% and Hero MotoCorp up by 0.51%. On the flip side, IndusInd Bank down by 8.12%,  IDFC down by 8.09%, Axis Bank  and Kotak Bank down and JP Associates down by 6.08% and were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined 0.29%, Hang Seng slipped 0.01%, Jakarta Composite dropped 0.53%, Nikkei 225 decreased 0.32% and Taiwan Weighted was down by 0.22%.

On the flip side, KLSE Composite rose 0.23%, Straits Times increased 0.49% and Seoul Composite was up by 0.23%.

European markets got off to a positive start ;with CAC 40 adding 0.66%, DAX rising 0.45% and FTSE 100 gaining 0.57%.6612806