Markets end in red on P-Note norms, fears of rising interest

Stocks: Markets ended in red on concerns about future foreign equity inflows triggered by tougher norms from the Securities and Exchange Board of India (Sebi) on Offshore Derivative Instruments (ODIs) or participatory notes (P-Notes).

Sentiment was also affected on fear that the US central bank may resume raising interest rates in the United States as early as next month.

State Bank of India (SBI) slumped 7.32%. SBI announced that it is seeking in-principle sanction of the Government of India (GoI) to enter into negotiation with its five subsidiary banks to acquire their businesses, including assets and liabilities.

The BSE benchmark Sensex resumed higher at 25,528.80 and shot up further to 25,927.31 on initial buying, after investors raised their exposure following exit polls that showed BJP coming to power in Assam for the first time.

However, it dropped afterwards to 25,251.90 before ending the week at 25,301.90, showing a loss of 187.67 points or 0.74%.

The NSE 50-share Nifty also dropped by 65.20 points or 0.83% to 7,749.70.

"Market participants were worried about the flow of foreign funds into India after Sebi tightened norms for issuers and subscribers of ODIs or participatory notes for the purpose of enhancing the transparency and control over the issuance of ODIs," said Shreyash Devalkar, Fund Manager - Equities, BNP Paribas MF.

Meanwhile, foreign portfolio investors (FPIs) and foreign institutional investors (FIIs) sold shares worth net Rs 372.25 crore during the week as per Sebi's record, including the provisional figure of May 20.

In the broader market, the BSE mid-cap index dropped 132.89 points or 1.19% to settle at 11,023.18. The BSE small-cap index skidded 149.04 points or 1.34% to settle at 10,964.26. The fall in both these indices was higher than the Sensex's decline in percentage terms.

Among the S&P BSE sector and industry indices, capital goods fell by 2.27%, followed by power (1.95%), bankex (1.58%), consumer durables (1.28%), Oil & Gas (1.14%), healthcare (1.02%), auto (0.84%), metal (0.55%), teck (0.54%), IT (0.11%) and FMCG (0.10%).

However, only realty rose by 2.13%.

Among the 30-share Sensex pack, 21 stocks declined and the rest nine rose during the week.

Other major losers were Adani Ports (5.60%), Lupin (4.99%), Reliance Ind (4.49%), Cipla (4.52%), Bharti Airtel (3.60%), NTPC (3.01%), ICICI Bank (2.87%), Bhel (2.81%) and Gail (2.65%).

On the other hand, Dr Reddy rose by 4.36%, followed by ONGC (4.31%), ITC (3.34%), Maruti (2.66%), Asian Paints (1.45%) and HDFC (1.20%).

The total turnover during the week on the BSE rose to Rs 15,237.67 crore from last weekend's level of Rs 12,550.76 crore, while that on NSE fell to Rs 79,727.92 crore from previous weekend's Rs 85,455.02 crore.

Forex: The rupee extended losses against the American currency for the third straight week, falling by another 67 paise to end the week at more than 2-1/2 month low at 67.44 per dollar on persistent demand for the US currency from banks and importers amid higher crude oil prices and fall in domestic equities.

The rupee sentiment was also affected following tougher norms from the Securities and Exchange Board of India on offshore derivative instruments (ODIs) or participatory notes (P-notes) which will affect foreign capital inflows.

International Brent crude rose to $50 a barrel mark after a multi-week rally as outages in Africa and Canada and production declines outside of the Middle East region fuelled expectations of a tighter supply.

The rupee resumed lower at 66.90 per dollar as against the last weekend's level of 66.77 per dollar at the Interbank Foreign Exchange (Forex) Market and dropped further to more than 2-1/2 month low at 67.50 per dollar before concluding the week at 67.44, showing a loss of 67 paise or 1.00%.

The rupee had last ended at 67.54 per dollar on March 2, 2016.

The rupee has lost 111 paise of 1.67% in three weeks.

The domestic currency hovered in a range of 66.67 and 67.50 per dollar during the week.

Meanwhile, the Indian benchmark Sensex dropped by 187.67 points or 0.74% to end at 25,301.90.