P-Notes heat erodes Rs 1.57 lac crore of investors’ wealth

PFW Bureau / Oct 20

Securities and Exchange Board of India (SEBI)’s proposal to restrict flow of the funds through the Participatory Notes (PNs) into the equity market has made a dent into the wealth of the investors. The market capitalization (M-Cap) dipped by 2.8% or Rs 1,57,447 crore over the week ended on October 19.

According to the data available with Bombay Stock Exchange (BSE), the M-Cap has come down heavily from Rs 55,80,197 crore on October 12 to Rs 54,22,750 crore on October 19.

The bourses tumbled in the mid-week following the decision of the regulator on October 16 night to seek opinion from the market participants on the restriction of the PNs. A high drama has been witnessed at the Dalal Street when BSE Sensex dipped 1700 points within five minites of the opening of the market on October 17. 

According to the data available with Bombay Stock Exchange (BSE), the 30-stocks Sensex dipped 4.6% or 860 points to close at 17,560 points over the week. Similarly, the S&P CNX NSE Nifty shed 3.9% or 213 points to end at 5,428 points during the corresponding period.

According to the data available with SEBI for the four trading sessions, the Foreign Financial Institutions (FIIs) were the net buyers at Rs 833 crore. However, they were the net sellers at Rs 444 on a single day trading session on October 17.

The Mutual Fund (MF) industry were the net sellers at Rs 338 crore during this period.

An analyst from a domestic brokerage firm said that SEBI proposal to restrict PNs play in the market has dampened the market sentiments. The FIIs started withdrawing their investments leading to a high volatility in the market.

Interestingly, the market volatility has impacted the stocks of the banking and public sector units  (PSUs) more than both the leading indicators of the equity market. The Opposition parties and Left demanding a ban on the PNs has further added fuel to the fire.

The BSE Bankex shed 5% or 473 points and BSE PSU dipped 5.3% or 462 points during the period under review.

Among other sectors, BSE Metal shed 2.4% or 361 points and BSE Oil lost 333 points or 3.1%. However, BSE IT ended flat.

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