Sensex, Nifty slump after air strike on Jaish terror camp in Pakistan

The RBI Monday proposed that at least 50 per cent of compensation of senior officials of private and foreign banks, including whole time directors and chief executive officers, "should be variable". The proposed guidelines also said minimum 50 per cent of variable pay is to be via non-cash component while mandating a compulsory deferral mechanism for variable pay, regardless of quantum of variable pay.

In January 2012, the Reserve Bank had issued the compensation guidelines for implementation by private sector and foreign banks from the financial year 2012-13.

"These (2012) guidelines are being reviewed, with an objective to better align with FSB (Financial Stability Board) Principles and Implementation “Markets are reacting to the tension on the border. These situations make markets nervous,” said Deven Choksey, founder and director of KR Choksey Investment Managers. Most shares traded in the red with both the indexes declining more than 1 percent minutes after markets opened. Indian markets dived on Tuesday after the country’s military aircraft conducted air strikes on militant camps inside Pakistan.

Indian markets dived on Tuesday after the country’s military aircraft conducted air strikes on militant camps inside Pakistan, escalating tensions between the two nuclear-armed neighbours.

India government confirmed the Air Force conducted air strikes on “terror camps” in Pakistan, after Pakistan’s military claimed that Indian jets crossed into its territory and “released a payload” after Pakistan scrambled its own jets, but there was no casualties or damage.

The confrontation follows the Feb. 14 suicide bombing in Kashmir, when 40 Indian paramilitary police were killed by a Pakistani-based militant group. New Delhi blamed Islamabad, which denies having a role in the attack.

The broader NSE Nifty was 0.86 percent lower at 10,787 as of 0510 GMT, while the benchmark BSE Sensex fell 0.88 percent to 35,894.36.

“Markets are reacting to the tension on the border. These situations make markets nervous,” said Deven Choksey, founder and director of KR Choksey Investment Managers.

“Expiry due on Thursday is also adding to the volatility,” Choksey added.

Most shares traded in the red with both the indexes declining more than 1 percent minutes after markets opened.

Index heavyweights on the NSE took a beating, with Reliance Industries Ltd and Housing Development Finance Corp Ltd declining as much as over 2 percent.

“Geopolitical tensions have been running high. So, any news flow is likely to spook the markets,” said Naveen Kulkarni, head of research, Reliance Securities.

Among the decliners, Dewan Housing Finance Corp Ltd fell over 8 percent, a day after ratings agency ICRA downgraded its rating on Dewan’s commercial paper.

Meanwhile, the rupee fell to 71.1375 to the dollar from Monday’s close of 70.9850. Indian bonds opened slightly late after a technical glitch on the trading and clearing platform. The 10-year benchmark bond yield rose to 7.5856 percent compared with 7.5839 percent on Monday.

“People don’t want to run position during such uncertain times,” said a dealer at a foreign bank.

“Had this strike not been there, bond yields would have been lower as crude is down.”Standards, based on experience and evolving international best practices," the RBI said while inviting comments from stakeholders by March 31.

The proposed guidelines, to be effective from the ensuing financial year (post issue of the final guidelines), further said, "Variable pay is to be capped at 200 per cent of fixed pay."

As per the extant guidelines, the variable pay is capped at 70 per cent of fixed pay but did not include ESOPs.

The proposed guidelines also said minimum 50 per cent of variable pay is to be via non-cash component while mandating a compulsory deferral mechanism for variable pay, regardless of quantum of variable pay.