 "P-Notes, China worries drag Sensex 2% lower")
Markets finished the session on a dismal note as participants remained wary on reports that market regulator Sebi may review the participatory notes (P-Notes) norms and Government’s move on the above to restrain black money coupled with the issue of levying MAT on FPIs.
Meanwhile, slump in the China’s benchmark index Shanghai Composite by 8% amid weak corporate earnings hurt the sentiments.
Provisionally, Sensex dropped 529 points to close at27,583 and the Nifty shed 160 points to close at 8,362 levels.
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(updated at 3.30 PM)Markets continued to trade sharply lower in late noon trades amid a sharp sell-off in Chinese shares even as the Finance Minister allayed fears about the Special Investigative Team's stringent norms on participatory notes (P-notes). Further, muted earnings from large corporates, reforms uncertainty amid political logjam, expiry of July derivative contracts, the outcome of the US Fed meet on July 28-29 also weighed on investor sentiment.
At 2:45PM, the 30-share Sensex was down 505 points at 27,608 and the 50-share Nifty was down 147 points at 8,375.
The broader markets also witnessed profit taking with the BSE Mid-cap and Small-cap indices down nearly 1% each.
Market breadth was weak with 1,610 losers and 1,061 gainers on the BSE.
The Supreme Court-appointed special investigative team (SIT) had, last week, recommended stricter norms for participatory notes (P-notes) to check the flow of unaccounted money. The markets seem to have viewed this development in a negative light.
Meanwhile, the Indian rupee was trading lower at 64.12 against the US dollar compared to the previous close of 64.03 amid fears of capital outflows in the weak of weakness in domestic equities.
GLOBAL MARKETS
Asian stocks ended lower after Chinese shares recorded their single-biggest drop in 5 1/2 years to end over 8% lower on Monday as investors booked profits while the sluggish economy also weighed on investor sentiment. China's benchmark share index, the Shanghai Composite ended down 8.5% at 3,752.56. Hong Kong's Hang Seng ended down 3.2% while Nikkei dropped 1% and Straits Times ended down 1.1%.
European markets opened lower tracking the sharp sell-off in Chinese stocks and investors turned cautious ahead of the US Fed meet this week. The CAC and DAX were down over 1% each while the FTSE was trading flat with positive bias.
SECTORS & STOCKS
The BSE Metal index was the top loser down 2.4% followed by Bankex, Realty, Auto, Oil and Gas among others.
Metal shares extended losses tracking sharp fall in global commodity prices and fears that demand from China, the world's largest consumer, would continue to remain muted. Tata Steel, Hindalco and Vedanta was down 3-4% each.
In the banking space private lenders were among the top losers amid fears of non-performing assets
Jaiprakash Associates total bank loans and long-term non-convertible debentures (NCDs) worth Rs.29,303.40 crore have been reduced to default rating by rating firm Credit Analysis and Research (CARE) due to a delay in servicing of debt by the company and poor liquidity. According to an 8 July report by brokerage house UBS, ICICI Bank Ltd, SBI, Axis Bank Ltd and Yes Bank Ltd have significantly increased their loan approvals to Jaypee Group. ICICI Bank, Axis Bank, HDFC Bank and SBI were down 1.3-3.9% each.
Tata Motors dipped over 3% its lowest level since March 2014 on the BSE, on concerns about a slowdown in JLR car sales from its subsidiary in China.
Reliance Industries witnessed profit taking and was down 1.3% despite the company posting better-than-expected first quarterly earnings on the back of higher gross refining margins.
Other losers include, L&T, Lupin, Infosys, ITC and ONGC among others.