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Sensex crashes 624 points, Nifty below 11,000 amid worldwide sell-off



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The domestic equity markets dropped on Tuesday, joining other global peers, after a string of bad news hit sentiment, prompting investors to seek refuge in safe-haven investments such as gold. Continuing political unrest in Hong Kong, a market rout in Argentina, and trade concerns between the US and China kept investors on tenterhooks.

The Sensex fell 624 points, or 1.67 per cent, to end at 36,958, while the Nifty 50 index dropped 184 points, or 1.7 per cent, to close at 10,926. If not for a 10 per cent jump in shares of Reliance Industries, the Sensex would have dropped nearly 1,000 points. Shares of India’s second-most valuable company rose most in nearly a decade, adding more than Rs 71,000 crore to its market capitalisation, as investors lapped them up on the company’s plan to aggressively reduce debt. Its market cap now stands at Rs 8.08 trillion.

Sensex crashes 624 points, Nifty below 11,000 amid worldwide sell-off

Besides Reliance Industries and Sun Pharma, most other Sensex components ended with losses, as foreign portfolio investors (FPIs) continued to take money off the table amid an uncertain global environment.

The benchmark indices had shot up around 2 per cent in the preceding two sessions on hopes that the government would announce measures to address investor concerns amid a series of meetings between the finance ministry and various industry participants.

“There is increasing uncertainty in the global markets, thanks to Argentina, rising trade tensions, a messy Brexit process, and the ongoing Hong Kong stand-off. All these point towards further risk-aversion and, therefore, hopes of robust inflows into India seem misplaced,” said U R Bhat, director, Dalton Capital India. “In short, there is no market positive news flow, whether domestically or internationally.”

ALSO READ: To allay concerns, govt must take business-friendly steps: Mukul Kochhar

The volatility in global markets comes at a time when India’s economy as well as markets have hit a rough patch. Also, corporate earnings of most key companies have left investors further disappointed.

“Weak corporate profits are a big headwind to growth. India, despite clocking one of the fastest economic growth, has not seen a commensurate profit for its businesses,” said Navneet Munot, chief investment officer, SBI Mutual Fund.

Since the Union budget, the benchmark indices have declined nearly 7 per cent amid continuous selling by overseas investors. In the past one month, FPIs have pulled out nearly Rs 25,000 crore from the equities market, spooked by an increase in tax surcharge announced in the Budget.

On Tuesday, FPIs sold equities worth Rs 638 crore, while domestic institutional investors bought shares worth Rs 201 crore.

Market players said the government needed to announce market-friendly measures to revive investor sentiment.

“Along with a reduction in the cost of capital, there is an urgent need to restore confidence amongst the business and investors community. The animal spirits, for both lenders and borrowers, must revive, and that can only happen by two set of forces; buoyancy in the global growth or by stability and predictability in fiscal policy environment,” said Munot.

Sensex crashes 624 points, Nifty below 11,000 amid worldwide sell-off

The market breadth was weak on Tuesday, with nearly two stocks declining for every one advancing on the BSE. Financial and automobile stocks fell the most. HDFC, which fell 5.1 per cent, and HDFC Bank, which declined 2.7 per cent, were the biggest drag on the index. Apart from Reliance Industries, Sun Pharma gained 3.7 per cent after its earning beat expectations. Telecom stocks tumbled on fears that Reliance Industries’ new initiative in broadband and telecom space will hurt revenues.

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Sitharaman’s sops for NBFCs may perk up lending, ease liquidity stress



Illustration by Binay Sinha

To further ease the liquidity stress in the non-banking sector and nudge them to revive their lending activities, Finance Minister (FM) Nirmala Sitharaman on Friday announced a slew of measures for non-banking financial companies (NBFCs) and housing finance companies (HFCs). The government hopes this will result in more credit support for purchase of houses, vehicles, and consumption goods.

The government has provided additional support of Rs 20,000 crore to the stressed housing finance companies from National Housing Bank (NHB). With this, the additional liquidity support for the HFCs from NHB has gone up to Rs 30,000 crore.

In the Union Budget last month, the FM had encouraged public sector banks (PSBs) to buy high-quality pooled assets of NBFCs up to Rs 1 trillion for which the government would provide a one-time six-month partial credit guarantee for the first loss of up to 10 per cent.

The Reserve Bank of India (RBI) had also chipped in by tweaking banks’ bond-holding norms. This will allow banks to borrow an additional Rs 1.34 trillion exclusively for buying such pooled assets and giving loans to NBFCs. The FM on Friday said this partial credit guarantee scheme will be monitored at the highest level in each bank. Through this, it is expected that many of the assets will get quickly pooled and NBFCs will receive the necessary liquidity. “NHB has already settled some of the issues. NBFCs are receiving money from the banks and are moving towards funding,” said Sitharaman.

Sanjaya Gupta, managing director, PNB Housing Finance, said “This will support growth and ease the liquidity crunch. HFCs will now get an additional Rs 20,000 crore from NHB. The initiatives have potential to kick start the real estate sector.”

The government has also permitted NBFCs to use Aadhaar-authenticated bank KYC to avoid repeating the same process when a customer approaches it for credit. This has been a long-standing demand. The necessary changes in the Aadhaar regulations and Prevention of Money Laundering Act rules will be made, the FM said.

“This will streamline the process and also reduce frauds,” said Raman Aggarwal, chairman, Finance Industry Development Council.

The government has also asked PSBs and NBFCs to fast-track their collaboration to provide credit to micro, small and medium enterprises, small traders, self-help groups, and micro finance industry client borrowers.

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PACL Case: Sebi panel invites expression of interest for 28,974 properties




A committee headed by Justice R M Lodha has invited expression of interest (EoI) from prospective buyers for a total of 28,974 properties belonging to PACL Group.

Market regulator Sebi had set up a committee headed by former Chief Justice of India R M Lodha following a Supreme Court order to refund money to investors in the matter of PACL Group.

As per the notice issued by Sebi, the committee has divided the total 28,974 properties belonging to PACL group in four zones — east, west, north and south — with maximum properties being located in the southern zone.

Regarding PACL properties, the apex court’s order dated July 30 observed “we also leave it open to the committee to receive any further offers and to explore them after duly publishing a further notice on the website,” the notice said.

In pursuance of apex court’s order, the committee “invites Expression of Interest from prospective buyers clearly indicating therein, list of properties in each zone, its circle rate, the offer amount and other relevant details,” the Friday notice said.

“The proposal should be for properties in each zone aggregating in value not less than Rs 1,000 crore,” the notice added.

The notice further said that the last date of receipt of proposals is September 9.

PACL, also known as Pearl Group, had raised Rs 60,000 crore from public in the name of agriculture and real estate businesses and was found by Sebi to have collected these funds through illegal collective investment schemes over 18 years.

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Improved market access for domestic retail investors with Aadhaar-based kYC



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The government will allow Aadhaar-based KYC for domestic retail investors, and necessary amendments to the rules under the Prevention of Money Laundering Act will be issued.

Announcing a slew of measures to boost the economy, the government said the Depository Receipt Scheme 2014 is expected to be operationalised soon by Sebi. “This will give Indian companies increased access to foreign funds through American Depository Receipt (ADR)/ Global Depository Receipt (GDR),” she said.

In order to improve market access for the domestic retail investors, Aadhaar-based KYC will be permitted for opening of demat account and making investment in mutual funds. In this regard, necessary notification for amendments in PMLA rules would be issued.

Besides, steps would be taken with regard to offshore rupee market.

“To bring offshore rupee market to domestic stock exchanges and permit trading of USD-INR derivatives in GIFT IFSC, Ministry of Finance is working with RBI to introduce this measure shortly,” the government said.

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