Sensex drops over 200 points, Nifty slips below 10,150; rift between govt, RBI affects sentiment

Mumbai: The BSE benchmark Sensex dropped over 200 points Wednesday amid rising tension between the Reserve Bank of India and the government. Investor sentiment turned weak in the early session on reports that the government may invoke certain provisions to issue directions to the central bank. The BSE Sensex turned choppy after opening higher and was trading 163.74 points, or 0.48 percent, lower at 33,727.39. It fell as much as 237.65 points on early trade. The 30-share index had fallen 176.27 points, or 0.52 percent, to 33,891.13 in Tuesday’s session. The NSE Nifty saw similar movement, trading 62.55 points, or 0.61 percent, down at 10,135.85. The bourse had as much dropped 79.95 points in morning session. Rumours were rife that the RBI Governor Urjit Patel might offer to resign if Section 7 of RBI Act is invoked to transfer reserves. Section 7 of the RBI Act empowers the government to consult and give instructions to the governor to act on certain issues that the government considers serious and in public interest. [caption id=“attachment_5263731” align=“alignleft” width=“380”]  Representative image. Reuters[/caption] Tata Steel, Coal India, Bharti Airtel, PowerGrid, NTPC, IndusInd, Adani Ports, ITC, Wipro and Vedanta are among the top losers, falling up to 4 percent. While Infosys, HDFC Bank, Yes Bank, Hero MotoCorp, Sun Pharma and ONGC were the top gainers, rising up to 2 percent. Traders said concerns over RBI governor Urjit Patel’s future, after reports suggesting the spat between the central bank and the government worsened, weighed on the market and the rupee. The rupee dropped by 40 paise to 74.08 against the US dollar in early trade Wednesday. Meanwhile, foreign portfolio investors (FPIs) sold shares worth a net of Rs 1,592.02 crore Tuesday, and DIIs were net buyers to the tune of Rs 1,363.04 crore, provisional data available with BSE suggested. Globally, Asian stocks gained taking cues from a rebound on Wall Street. Japan’s Nikkei was trading 1.70 percent up, Shanghai Composite index rose 1.13 percent, Hong Kong’s Hang Seng rose 0.60 percent and Taiwan Weighted was up 1.80 percent in their early sessions. The Dow Jones Industrial Average jumped 1.77 percent, the S&P 500 was up 1.57 percent and the Nasdaq Composite gained 1.58 percent in Tuesday’s session.