BackSensex closes 161 points down on profit booking, Sebi comments on P-Notes
The National Stock Exchange's broader barometer 50-share CNX Nifty fell 0.79%, or 67.05 points, to end at 8,463.10 points
Premium
Mumbai: After hitting new highs for two consecutive days, India’s equity markets fell as investors booked profits and took note of comments made by market regulator Securities and Exchange Board of India (Sebi) on participatory notes (P-Notes).
The Sensex closed 0.57%, or 161.49 points, lower at 28,338.05 points, while the National Stock Exchange’s broader barometer 50-share CNX Nifty fell 0.79%, or 67.05 points, to end at 8,463.10 points.
“Markets are nervous following Sebi’s comments on P-Notes. There is some selling pressure which could be from the foreign institutional investor side," said Deven Choksey, managing director, KR Choksey securities.
In a clarification issued on Monday evening, Sebi said that a foreign portfolio investor or FPI can issue offshore derivative instruments (ODIs), which predominantly comprises of P-notes, only to those subscribers that do not have an opaque structure.
The value of outstanding investments through P-notes into India’s capital market stood at ₹ 2.66 trillion at the end of October, the highest level in almost seven years. According to Sebi data, the total outstanding value of P-notes has been rising steadily since July this year. At the end of October, this stood at ₹ 2.66 trillion, including ₹ 1.63 trillion in equities, about ₹ 23,116 crore with underlying investment in debt instruments and the rest based on derivatives.
P-notes, which can be issued by FPIs registered with Sebi, allow overseas investors, hedge funds and other foreign institutions to invest in Indian markets without directly registering with Sebi. This helps investors avoid the time, cost and other procedural issues associated with direct registration.
Among specific stocks, ITC Ltd fell 5.18% to ₹ 355 after Bloomberg reported that India’s health ministry accepted recommendations on banning the sale of single cigarette sticks, raising minimum legal age for sale of tobacco products and increasing penalty amounts for violations and making offences cognizable. Tata Steel Ltd fell 2.25% to ₹ 465.90.
Among S&P BSE sectoral indices, realty index was the top sectoral loser down 3.35%.
Shares of India Cements Ltd fell 9.2% to ₹ 94.80 after the Supreme Court on Monday questioned how the Board of Control for Cricket in India’s (BCCI’s) sidelined president N. Srinivasan could also own a team in the Indian Premier League (IPL).
ING Vysya Bank Ltd fell 3.71% to ₹ 783.30 and Kotak Mahindra Bank Ltd fell 3.45% to ₹ 1,158.20 after Sebi called for stock exchange data to check for any unusual trading in the shares of the two banks, and whether such trades could have breached market regulations.
Power Grid Corp. of India Ltd fell 1.44% to ₹ 140.10 after MSCI said the company will be removed from its Global Standard Index from 26 November. The Reserve Bank of India (RBI) also put restrictions on further purchase of the company’s shares by foreign investors. Reliance Capital Ltd fell 4.52% to ₹ 481.85 and Jaiprakash Associates Ltd fell 7.01% to ₹ 29.20—two other stocks which will be excluded from the MSCI index. Zee Entertainment Enterprises Ltd rose 1.58% to ₹ 391.40 while Motherson Sumi Systems Ltd fell 1.41% to ₹ 433.20 as they join the MSCI index from Wednesday.
Bharat Heavy Electricals Ltd (Bhel) rose 2.95% to ₹ 265.20 while Housing Development Finance Corp. Ltd rose 1.28% to ₹ 1,148.70.
Bharti Airtel Ltd gained 1.3% to ₹ 403.15 after the company said it will sell 4,800 of its towers in Nigeria, one of its biggest markets in Africa, to American Tower Corp. (ATC), for an undisclosed amount.
Since the beginning of this year, the Sensex has gained 34.57%, while foreign institutional investors have bought $15.45 billion from local equity markets.
The government will issue gross domestic product (GDP) data for the September quarter and fiscal deficit data for October on 28 November. A Bloomberg poll estimates GDP growth at 5.1% compared to 5.7% in the June quarter. RBI will announce its monetary policy on 2 December.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
