After opening the day on a positive note, share markets in India witnessed volatile trading activity and ended in the red. Sectoral indices traded in red, with stocks in the realty sector, and FMCG sector leading the losses.

At the closing bell, the BSE Sensex stood lower by 170 points (down 0.5%) and the NSE Nifty closed down by 45 points (down 0.4 %). The BSE Mid Cap index ended the day down by 0.5%, while the BSE Small Cap index ended the day down 1.3%.

The rupee was trading at Rs 72.46 against the US$ in the afternoon session.

Asian stock markets finished on a positive note. As of the most recent closing prices, the Hang Seng was up by 1.2% and the Shanghai Composite was up by 1.1%. The Nikkei 225 was up by 1%.

Shares of asset management companies (AMCs) were in focus today and witnessed selling pressure on fears of the impact on their revenue and profitability after the market regulator reduced the total expense ratio (TER)- the fee funds collected from investors every year.

The development came as the regulator on Tuesday capped the total expense ratio for equity oriented mutual fund schemes (close-ended and interval schemes) at 1.25% and for other schemes at 1%. The cap for fund of funds was capped at 2.25% for equity-oriented schemes and 2% for other schemes.

The regulator said that all the mutual fund commissions and expenses must be paid from the scheme itself and that the industry must adopt a full trail mode of commission in all schemes without paying any upfront commission.

The above development will mean lower revenue yields for most AMCs and will further affect their profitability.

On the other hand, it will benefit investors in equity mutual funds from the cut of TER.

The above news sent HDFC AMC and Reliance Nippon AMC trade on a negative note. Stocks of both the companies hit their lowest levels since their trading debut with HDFC AMC share price closing its session down by 8.6% and Reliance Nippon share price closing down by 11.3%.

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