Benchmarks lurch in red; Nifty breaks down crucial 5400 level

Indian equity markets pared gains to continue weak trade in the late afternoon session on account of selling pressure in front line counters and taking cues from weak global markets. The sentiments turned pessimistic after Former deputy governor of Reserve Bank of India (RBI) Subir Gokarn stated that he believes India needs comprehensive and realistic solution to deal with the ballooning current account deficit, which is the root cause of all macro woes. Gokarn added that the tactical measures taken by the RBI are not addressing heart of problems of the CAD. The pressure will continue till fundamental problems are addressed. Traders were seen piling position in Bankex, Consumer Durables and Power stocks while selling was witnessed in FMCG, Metal and Oil & Gas sector stocks. In scrip specific development, Axis Bank was trading in green after the country’s third largest private sector bank filed an application with the Foreign Investment Promotion Board (FIPB) for increasing the foreign shareholding limit in the bank up to 62%. JBF Industries was trading in green ahead of board meet for buyback of equity shares.

On the global front, most of the Asian markets were trading in red while the European markets were trading on mixed note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,400 and 18,200 levels respectively. The market breadth on BSE was negative in the ratio of 999:1080, while 139 scrips remain unchanged. 

The BSE Sensex is currently trading at 18118.26, down by 127.78 points or 0.70% after trading in a range of 18567.70 and 18048.86. There were 10 stocks advancing against 20 declines on the index.

The broader indices were too trading in red; the BSE Mid cap and Small cap indices were trading lower by 0.25% and 0.03% respectively.

The top gaining sectoral indices on the BSE were, Bankex up by 0.96%, Consumer Durables up by 0.54% and Power up by 0.22%. While, FMCG down by 2.41%, Metal down by 1.50%, Oil & Gas down by 1.45%, Health Care down by 1.36% and TECK down 1.16% were the top losers indices on the BSE.

The top gainers on the Sensex were, BHEL up by 4.53%, Tata Power up by 3.26%, HDFC up by 2.86%, HDFC Bank up by 2.70% and Gail India up by 1.68%. On the flip side, Dr. Reddy’s Lab down by 3.32%, Sun Pharma down by 3.28%, ITC down by 3.22%, Sterlite Industries down by 2.76% and Bharti Airtel down by 2.76% were the top losers on the Sensex.

Meanwhile, following the debacle at the NSEL and rising concerns over its inability for paying dues, the Forward Markets Commission (FMC), presently regulated by the consumer affairs ministry, has drawn much dissension. The government may consider plans to bring the FMC under the purview of the finance ministry, which already oversees the operations of several regulators, including SEBI, IRDA and PFRDA. Bringing FMC under the purview of finance ministry will ensure better co-ordination of regulators.

Earlier this month, NSEL had shut down its operation following the government direction in the wake of violation of certain rules and has given seven-month period to investors to settle their Rs 5,600 crore. However, the exchange could settle only Rs 92.12 crore out of the scheduled of Rs 174.72 crore payment it had committed to FMC.

Concerned over payment crisis at NSEL, the Forward Markets Commission on August 20 has ordered NSE to disclose the party-wise amount deposited in the escrow account maintained with Axis Bank on a daily basis. It also ordered NSE to reconcile the amount of pay-in and pay-out to be made to various members of the exchange. FMC also came down on NSEL for incorrect data and raised doubts on the seriousness of the exchange’s management to resolve the crisis. Meanwhile, the government is also planning to conduct an audit of NSEL’s physical stocks lying in warehouses by own agencies as it fears defaults in payment by buyers.

The CNX Nifty is currently trading at 5,361.25, down by 40.20 points or 0.74% after trading in a range of 5,504.10 and 5,340.60. There were 19 stocks advancing against 31 declines on the index.

The top gainers of the Nifty were Indusind Bank up by 7.09%, BHEL up by 4.69%, Tata Power up by 3.54%, HDFC up by 2.94% and HDFC Bank up by 2.60%. On the flip side, Ranbaxy Laboratories down by 8.29%, Sesa Goa down by 7.21%, JP Associates down by 5.24%, ACC down by 3.86% and Cairn India down by 3.84% were the major losers on the index.

Most of the Asian equity indices were trading in red; Hang Seng down by 0.69%, KLSE Composite down by 0.03%, Straits Times down by 0.61% and Kospi Composite down 1.08% while, Shanghai Composite up 0.02%, Nikkei 225 was up by 0.21% and Jakarta Composite up by 1.04%.

The European markets were trading on mixed note; France’s CAC 40 was up 0.16%, Germany’s DAX lost 0.01% and the United Kingdom’s FTSE 100 dropped 0.39%.