Sensex dives 551 pts on P-Note fears

A crashing Chinese stock market, which saw its sharpest decline in eight years, combined with fears of negative implications of the government's move to take a re-look at the working of participatory notes (P-Notes), pulled the sensex down by 551 points, or 2%, on Monday to 27,561.

The logjam between the ruling NDA and the opposition that is affecting the working of Parliament and hampering passing of bills crucial for further economic liberalization also affected investor sentiment, brokers said. Confused by the conflicting signals from the government and the market, foreign investors sold heavily, taking out nearly Rs 860 crore, resulting in 29 of the 30 sensex stocks closing in the red Stock Market Trading Tips

The sensex started the week on a negative note, down about 200 points on the back of a special investigation team on black money recommending to Sebi to take steps to curb flow of black money into the stock market. The recommendations included taking measures relating to the origin and use of P-Notes.

Latest Sebi data showed that P-Notes, which a form of offshore derivatives contracts that foreign players invest in with a relatively opaque ownership, worth about Rs 2.76 lakh crore have been in existence and any adverse decision relating to their use could lead to a large-scale selling by FIIs, the P-Note issuers, in the Indian market. For long it has been suspected that P-Notes are used to route black money into the stock market. Dealers said market will remain cautious and wait for further action from the government and Sebi on usage of P-Notes by FIIs. The sensex lost further ground after the Shanghai index crashed nearly 10% and closed 8.5% lower Indian stock market astrology prediction

According to Dharmesh Mehta, interim CEO, Axis Capital, a combination of global and local factors led to the sharp drop in the Indian market. "The China factor, confusion about P-Notes and the likelihood of key reforms bills not being passed in the current session of the Parliament affected market sentiment," Mehta said. Before the start of the monsoon session of Parliament last week, expectation was that some of the key bills like GST and labour reforms could be passed. However, with the opposition parties taking on the government on the floor of Parliament over various issues, these key bills are unlikely to be passed in this session. "Keeping aside global factors, FIIs are more concerned about the fundamental changes that could boost the economy," Mehta said Personal Numerology

Brokers said that investors are also waiting to see what stand the government takes on MAT on foreign investors before the Supreme Court when a case relating to MAT's applicability on long-term capital gains comes up for hearing on August 4. Last week, a government-appointed committee presented its report on the applicability of MAT which has not yet been disclosed. The committee was set up after the income tax department last year issued notices to several FIIs for payment of MAT on their gains from stock trading for the past few years. In case the government presses ahead with MAT on FIIs' operations in India, the market may see a sharp correction, brokers said Sensex Astrology

The day's slide left investors poorer by Rs 1.5 lakh crore with BSE's market capitalization now at Rs 101.5 lakh crore. Among the top sensex laggards were Tata Steel, Hero Motors and Hindalco while Bajaj Auto was the lose gainer.

Although the stock market slid sharply, gold prices climbed above the Rs 25,000 per 10 gram mark again, partly because of the weakness of the rupee which closed at 64.17 to a dollar, down 13 paise from its Friday close Jackpot Stocks Trading Tips