THE FALL CONTINUES

The losses at Dalal Street have just grown deeper and bigger as the renewed euro-zone woes have sent investors scurrying out of riskier stocks. Investors across the board were rattled by the surprise resignation of Juergen Stark, a key official at the European Central Bank. His decision revealed deepening divisions over how to solve Europe's economic problems and exacerbated concerns that the continent's heavily indebted economies could collapse. All this led to heavy Wall Street losses before the weekend. Dow Jones industrial average dropped 303.68 points, or 2.69 percent, to 10,992.13. The Standard & Poor's 500 Index dropped 31.67 points, or 2.67 percent, to 1,154.23. Meanwhile, the Nasdaq Composite Index dropped 61.15 points, or 2.42 percent, to 2,467.99.  The Asian equity indices too following the global rout were showcasing a downtrend. Moreover, the US future indices too were showing a downtick in the screen trade, with Dow Jones Indus. Avg future index trading down with a cut of 2.69%. Back home, stocks from Information Technology, Metal and TECk counters were down and out with prominent losses, while stocks from defensive -FMCG counter- showcased the immense resilience. The 30 share sensitive index- Sensex- tanking over 300 points is trading at its day's low of 16,550.18. Meanwhile, the 50 share index- Nifty- quashing over 75 points is currently trading sub 5000 mark. The broader indices too were smashed cruelly as both (midcap and smallcap index) were trading lower with a cut of over 1.20%. The overall market breadth on BSE was trading in the favour of declines which outpaced advances in the ratio of 1507:653, while 63 shares remained unchanged.
Meanwhile, disenchantment has clouded Dalal Street post the release of July IIP numbers. India's industrial output (IIP) rose 3.3 percent in July from a year earlier, slower than June's 8.8 percent growth, moderated by successive interest rate rises. IIP data was below expectations as manufacturing output, which constitutes about 76 percent of the industrial production, rose an annual 2.3 percent in July. The street expected that India's industrial output probably rose slower than June's 8.8 percent growth at 6.2 percent in July.
The BSE Sensex is currently trading at 16,550.18; about 316.79 points lower compared to its previous closing of 16,866.97. The index has touched a high and low of 16,668.25 and 16,539.04 respectively. 3 stocks were advancing against 27 declining one's on the index.
The broader indices too were bleeding profusely; the BSE Mid cap and Small cap indices were down by 1.31% and 1.21% respectively.
IT down by 3.35%, Metal down by 3.08%, TECk down by 2.70%, Bankex down by 2.52% and Realty down by 1.89%, were the top losers on the index. While, FMCG up by 0.04% remained the lone gainer on the index.
HUL up by 3.08%, Cipla up by 1.15% and ONGC up by 0.92% remained the top and the few gainers on the Sensex. While, Jindal Steel down by 4.08%, Tata Motors down by 3.68%, Jaiprakash Associate down by 3.55%, Infosys down by 3.49% and Tata Steel down by 3.48% were the top losers on the index.
Meanwhile, the Reserve Bank of India (RBI) has indicated that it will not give any hedging support to the Infrastructure Development Funds (IDFs) from India's foreign exchange reserves. The RBI as a policy will not provide any kind of foreign exchange hedging or support from the country's foreign exchange reserve for the forex risk of the IDFs. However, to facilitate investment in the infrastructure sector, the government had proposed to set up IDFs which could be in the form of a mutual fund or non-banking financial company (NBFC).
The issue relating setting up of IDFs was discussed in the high level meeting of the financial stability and development council (FSDC). Finance Minister Pranab Mukherjee in his budget speech had announced creation of IDF's to accelerate and boost the flow of long-term debt in infrastructure projects. Country's foreign exchange reserves stood at $285 billion for week ended on September 2.

The proposed IDFs can be in the form of a Mutual Fund or Non Banking Financial Company (NBFCs). IDFs, which will be in form of mutual funds, would be regulated by capital market regulator, Security Exchange Board of India (SEBI) and IDFs in the form of NBFCs would be governed by RBI. The investment requirements for the next five year plan are pegged at $1 trillion from $500 million in the current plan.

In order to make IDFs more effective, the RBI has agreed to decline the risk weights for IDFS to 50% from the earlier recommended 100%. This would allow IDFs to more fund to finance infra projects as it have to keep less capital for meeting the solvency norms. 'This (decision) would enable IDFs to lend twice as much to infrastructure without impacting intermediation costs,' the RBI said.
RBI, however, insisted on a minimum entry capital for IDF-NBFC at Rs 300 crore, three times over Rs 100 crore proposed by the government initially. The higher entry capital would ensure that the IDF-NBFC would remain well capitalized. The capital market watchdog, SEBI, had already issued its guideline for the IDF-Mutual fund. However, the RBI is still to issue its norms for IDF-NBFC.
The S&P CNX Nifty is currently trading at 4,970.45, down by 89.00 points or 1.76%.  The index has touched a high and low of 4,985.60 and 4,954.90 respectively. There were just 7 stocks advancing against 43 declining one's on the index.
The major gainers of the Nifty were HUL up by 2.69%, Cipla up by 1.17%, ONGC up by 1.07%, Tata Motors up by 1.06% and Grasim Industries up by 0.74%.HCL Technologies down by 4.52%, PNB down by 3.53%, Sesa Goa down by 3.46%, Tata Steel by 3.44% and Infosys down by 3.27% were the major losers on the index.
All the Asian equity indices were trading in the red; Shanghai Composite was down by 0.03%, Hang Seng down by 3.38%, Jakarta Composite down by 1.77%, KLSE Composite down by 1.28%, Nikkei 225 down by 2.24% and Straits Times down by 2.17%.
Stock markets in mainland China, Taiwan and South Korea were closed for a holiday.