A lot of voices on Dalal Street had been talking of the psychological 12,000 level, and the Sensex finally breached that level today, closing the day at 11,801.7, down by over 700 points. This year, the benchmark has shed almost 42%.

The other big news was SEBI’s rollback of curbs on FIIs that were imposed a year ago. Last October, the market regulator had initiated a move making it mandatory for investors to register in India before buying shares as well as setting limits on offshore derivatives. Under those limits, foreign investors could only issue offshore derivatives linked to stocks up to a limit of 40 per cent of assets under custody.

SEBI also rolled back rules that banned overseas investors from issuing participatory notes (P-Notes) on derivatives. This means investors can issue P-Notes on single stock and index futures and options.

P-Notes are issued by Sebi-registered foreign investors to unregistered overseas investors and the identity of the instrument holder is not known. SEBI had therefore clamped down on such investors given the amount of ‘hot money’ flowing in amidst allegations that terrorists were funding these entities.

This news did nothing to reverse the downward trend in the market and almost all the big stocks declined anywhere from 5% to 15-20%, with some exceptions like Cambridge Solutions. The stock hit the 5% upper circuit on news that UK-based BPO Xchanging acquired a 75% stake in the company for £83 million (~Rs.687 crore), valuing the company at Rs.81 per share. The stock ended the day at Rs.62.35.

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