Carnage continues on Dalal Street; benchmarks plunge by over 1.50%

Indian frontline equity indices got pulverized to fresh lows in the Friday afternoon session after risk aversion intensified across the board as a slew of gloomy developments from the Euro-zone spooked already skittish sentiments. The fifty share index - Nifty traded suffered a brutal assault of over one and half a percent and cracked below the important psychological 4,900 levels. The spike in Spanish government bond yields and mounting worries that the exacerbating Euro-zone debt trouble would bite into global economic growth dampened investors’ morale. Investors remained unwilling to pile up fresh positions as they feared that the euro currency union could be heading toward an ugly breakup. Back home, market participants punished the Capital Goods and high beta Realty counters as they plunged around three percent. Index heavyweight Reliance Industries too failed to make its presence felt as it continued to tumble and traded with over two percent cuts. Some selling pressure was also evident in Power and Metal counters which lost around two and half a percentage point. Though there appeared no gainer in the sectoral space thanks to the across the board sell-off however, individual stocks like Hero Moto and drug makers like Cipla and Sun Pharma traded with some gains.

Moreover, the broader markets too suffered nasty lacerations of over two percent and extended the streak of underperformance as compared to their larger peers. While the bourses were getting butchered, serious escalation in volumes was evident as the overall turnover crossed the Rs 1 lakh core mark and the market breadth on BSE was dominantly in favor of declines in the ratio of 2099:495 while 84 scrips remained unchanged.

The BSE Sensex is currently trading at 16,194.21 down by 267.50 points or 1.62% after trading as high as and 16,387.70 as low as 16,164.99. There were 4 stocks advancing against 26 declines on the index.

The broader indices were trading in the negative zone; the BSE Mid cap index plunged 2.13% and Small cap plummeted 2.61%.

On the BSE sectoral space there were no gainers while Capital Goods down 3.11%, Realty down 2.85%, Power down 2.79%, Metal down 2.23% and PSU down 2.19% were the major losers in the space.

Hero Moto up 2.04%, Cipla up 1.38%, Sun Pharma up 1.22% and Bharti Airtel up 0.10% were the only gainers on the Sensex, while BHEL down 5.57%, JP Associates down 3.67%, Tata Motors down 3.54%, Tata Steel down 3.09% and Maruti Suzuki down 2.97% were the major losers on the index.

Meanwhile, Reserve bank of India (RBI) has directed banks dealing in foreign exchange (forex) to exercise caution in respect of transaction by Indian resident where margin payments through a credit card or deposit are required in view of the risk of fraud. ‘Banks were advised to exercise due caution and be extra vigilant in respect of the margin payments being made by the public for online forex trading transactions through credit cards / deposits in various accounts maintained with banks in India,’ the RBI said in a notification.

By adding further RBI said, banks were also advised to exercise due care in respect of the accounts being opened in the name of individuals or proprietary concerns at different bank branches for collecting the margin money, investment money, etc. in connection with such transactions. The RBI has observed cases where abroad foreign exchange trading has been introduced on a number of internet and electronic trading portals, attracting Indian residents with offers of guaranteed high returns based on such forex trading.

'The advertisements by these internet/online portals exhort people to trade in forex by way of paying the initial investment amount in Indian rupees. Some companies have reportedly engaged agents who personally contact people to undertake forex trading/investment schemes and entice them with promises of disproportionate/exorbitant returns,’ RBI said.

As per the RBI, majority of forex trading via such portals is done on margining basis with huge leverage or on an investment basis, where the returns are based on forex trading. The public is asked to make the margin payments for such online forex trading transactions via credit/deposits in various accounts maintained with banks in India. 

'It is also observed that accounts are being opened in the name of individuals or proprietary concerns at different bank branches for collecting the margin money, investment money, etc,' it said.  The RBI further, warned that any person who is residing in India and engaged in collecting or remitting such payments either directly or indirectly abroad would be liable to face action as per the rules of the Foreign Exchange Management Act (FEMA) and other laws.

The S&P CNX Nifty is currently trading at 4,852.50, lower by 82.25 points or 1.67% after trading as high as 4,902.25 and as low as 4,837.95. There were 7 stocks advancing against 43 declines on the index.

The top gainers on the Nifty were Hero Moto up 2.42%, Cipla up1.69%, BPCL up 1.07%, Sun Pharma up 0.91% and Siemens up 0.60%.

BHEL down 5.67%, R Com down 4.85%, Seas Goa down 4.47%, JP Associates down 4.07% and Axis Bank down 4.01% were the major losers on the index.

Asian markets traded on a disappointing note, Shanghai Composite plummeted 1.91%, Hang Seng sank 1.93%, Jakarta Composite plunged 0.95%, KLSE Composite shed 0.35%, Nikkei 225 shaved off 1.23%, Straits Times declined 1.32%, Seoul Composite slumped 2% and Taiwan Weighted nosedived 2.08%.