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Indian Markets Open Weak
Fri, 4 Dec 09:30 am

Major Asian stock markets have opened the day on a dismal note, with stock markets in Japan (down 2.2%) and China (down 1.2%) being the top losers. Major stock indices in Europe ended their previous session deep in red after the European Central Bank kept the benchmark lending rates unchanged and reduced its deposits rate by 10 bps to minus 0.3%. The markets in US too reacted negatively to the European Central Bank's policy and ended their day lower by 1.7%. The rupee is trading at 66.74 per US dollar.

Indian stock markets too have opened the day on a disappointing note. BSE-Sensex is trading lower by 177 points (down 0.7%) and NSE-Nifty is trading lower by 60 points (down 0.8%). Both S&P BSE Midcap and S&P BSE Smallcap are trading lower by 0.3% and 0.5% respectively. Major sectoral indices have opened the day on a weak note too. Stocks from banking and oil and gas sectors are facing the maximum brunt.

As reported in a Financial daily, the government indicated that the rules for Participatory Notes (P-Notes) may not be tightened further. Speaking on the same Mr Jayant Sinha, Minister of State of Finance stated that the Know Your Customer (KYC) norms associated with P-Notes are quite strict and robust enough and there are enough regulations to ensure that a legitimate institution is transacting through P-Notes.

The tensions regarding 'P-Notes' had stimulated ever since the Special Investigating Team (SIT) appointed by the Supreme Court had raised concerns regarding the ultimate beneficiaries of the 'P-Notes' and the use of this instruments for the purpose of tax evasion.

As per data available with the Security Board of India (SEBI), the value of 'P-Notes' holdings stood at Rs.2.5 trillion as at the end of October 2015. It was in 2007 that P notes had been cracked down upon. What followed was a correction of 10% in the markets within a matter of minutes that led to a halt in trading. Owing to such an occurrence in the past, Mr Jaitley stated that the government will not take any action which has an adverse impact on the investment environment.

As per an article in Livemint, iron ore prices have fallen to the lows of 2008. Recently, iron-ore was traded at US$ 42.97 a tonne at Qingdao Port in China, the lowest levels since May 2008.

To add to the woes, new capacity is entering the market from the Australia's Roy Hill project which is expected to further drag down the iron-ore prices. The prices are at its bottom owing to weak demand from the steel industry which is its main consumer and the excess availability of the iron-ore.

The prices of iron-ore have corrected by 42.3% since the beginning of this calendar year. However, there are talks to cut the export duty on iron-ore. This will provide a relief to players such as National Mineral Development Corporation (NMDC) and Vedanta Ltd. NMDC stock has shed of a third of its value within a period of one year.

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Mar 16, 2018 (Close)