Post Session: Quick Review

Indian equity markets that traded on a firm note for most part of the day suffered selling pressure at latter part of the day as investors’ opted booking profit in select blue chip counters a day ahead of the discussion on GST Bill. The profit booking took place as investor sentiment turned negative after European markets hit a two-week low following poor results from some firms. Earlier, the market made a firm start as the stage was set for the introduction and likely passage of the constitutional amendment bill in the Rajya Sabha to enable the roll-out of the Goods and Services Tax (GST). The government circulated to the MPs the amendments it has proposed in the constitution amendment bill to enable implementation of the tax. Parliamentary affairs minister Ananth Kumar said that the GST bill has been listed in the Rajya Sabha agenda on Wednesday and the mood is in favour of its passage as the bill seeks support of all political parties. The sentiments got some support with India’s core sector expanding at its fastest rate in last two months which showed a growth of 5.2 percent in June, compared with a 2.8 percent rise in May and 3.1 percent in the year ago period, riding on double digit growth in the cement, coal sector and a huge jump in output of electricity.

On the global front, European stocks fell to a two-week low dragged down by banks  while the yen rose against the dollar and government bonds sold off after Japan’s cabinet approved a fiscal stimulus package to revive the flagging economy. Japanese Prime Minister Shinzo Abe’s cabinet approved 13.5 trillion yen ($132.04 billion) in fiscal steps as part of efforts to revive Japan’s economy.

Back home, the downside was arrested with Power Minister Piyush Goyal’s statement that India is expected to have surplus power supply in 2016-17. The minister added that according to the Load Generation Balance Report (LGBR) for the year 2016-17 published by the Central Electricity Authority (CEA) surplus power is anticipated for 1.1% in terms of energy and 2.6% in terms of peak. This is the first time that India will witness a power surplus situation. On the sectoral front, the bullishness in the auto sector stocks after reporting good monthly sales numbers for the month of July supported the markets. The NBFC stocks were buzzed with Reserve Bank of India (RBI) issuing new licensing guidelines that seek to encourage non-banking finance companies (NBFCs) to turn themselves into full-fledged banks. The other key highlight of the much-awaited guidelines is that they have excluded large industrial houses as eligible entities from the purview, though they can invest in banks up to 10 percent.

The BSE Sensex ended at 28010.72, up by 7.60 points or 0.03% after trading in a range of 27943.91 and 28175.22. There were 11 stocks advancing against 19 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.63%, while Small cap index down by 0.82%. (Provisional)

The gaining sectoral indices on the BSE were FMCG up by 1.89% and IT up by 0.06% while, Metal down by 1.58%, Realty down by 1.34%, Power down by 0.84%, Oil & Gas down by 0.40% and Auto down by 0.38% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were ITC up by 4.23%, Maruti Suzuki up by 2.67%, Hero MotoCorp up by 1.20%, ONGC up by 0.89% and Power Grid Corporation up by 0.87%.

On the flip side, HDFC down by 2.66%, Tata Motors down by 2.58%, Bharti Airtel down by 1.82%, Wipro down by 1.55% and ICICI Bank down by 1.38% were the top losers. (Provisional)

Meanwhile, Reserve Bank of India (RBI) has released the much awaited guidelines for ‘on tap’ licensing of Universal Banks in the Private Sector. As per the guidelines for 'on tap', large industrial houses are excluded as eligible entities but are permitted to invest in the banks up to 10 per cent.

The guidelines released by the RBI says that  Individuals/professionals who are 'residents' and have 10 years of experience in banking and finance at a senior level and existing non-banking financial companies (NBFCs) that are 'controlled by residents' and have a successful track record for at least 10 years can apply for the on tap licence. Further, entities/groups in the private sector that are 'owned and controlled by residents' and have a successful track record for at least 10 years, provided that if such entity/group has total assets of Rs 5,000 crore or more, the non-financial business of the group does not account for 40 per cent or more in terms of total assets/in terms of gross income are also eligible promoters. Besides, the applicant would have to pass the 'Fit and Proper' criteria. According to it, promoter/promoting entity/promoter group should have a past record of sound financials, credentials, integrity and have a minimum 10 years of successful track record.

The requirement of Non-Operative Financial Holding Company (NOFHC) is not mandatory for individual promoters but other group entities shall set up the bank only through an NOFHC. Not less than 51 per cent of the total paid-up equity capital of the NOFHC shall be owned by the Promoter/Promoter Group.

The initial minimum paid-up voting equity capital for a bank shall be Rs 500 crore. Thereafter, the bank shall have a minimum net worth of Rs 500 crore at all times. The NOFHC shall hold a minimum of 40 per cent of the paid-up voting equity capital of the bank which shall be locked-in for a period of five years from the date of commencement of business of the bank. However, the foreign shareholding in the bank would be as per the existing Foreign Direct Investment (FDI) policy. At present, the aggregate foreign investment limit is 74 per cent.

The guidelines said, the licensing window will be open on-tap, and the applications could be submitted to the RBI at any point of time. The applications will be referred to a Standing External Advisory Committee (SEAC) to be set up by the Reserve Bank. The validity of the in-principle approval issued by the RBI will be 18 months from the date of granting in-principle approval and would thereafter lapse automatically.  The RBI had last issued guidelines for licensing of new banks in the private sector on February 22, 2013. Consequently, the RBI issued in-principle approval to two applicants, Bandhan Bank and IDFC Bank and they have since established the banks.

The CNX Nifty ended at 8626.35, down by 10.20 points or 0.12% after trading in a range of 8611.40 and 8687.20. There were 18 stocks advancing against 32 stocks declining on the index, while one stock remained unchanged. (Provisional)

The top gainers on Nifty were ITC up by 4.27%, Maruti Suzuki up by 2.69%, Bank of Baroda up by 2.58%, HCL Tech up by 2.43% and Tech Mahindra up by 1.84%.(Provisional)

On the flip side, Aurobindo Pharma down by 3.07%, Tata Motors down by 2.79%, BHEL down by 2.47%, Ambuja Cement down by 2.47% and HDFC down by 2.36% were the top losers. (Provisional)

The European markets were trading mostly in red; Germany’s DAX declined by 139.31 points or 1.35% to 10,191.21, France’s CAC slipped 60.54 points or 1.37% to 4,348.63 and UK’s FTSE 100 was down by 26.32 points or 0.39% to 6,667.63

Asian equity markets ended mostly lower in a cautious trade on Tuesday, with recent yen strength, the continued downturn in oil prices and lackluster US data weighing on markets. Japanese Prime Minister Shinzo Abe's cabinet approved a 28 trillion yen ($274 billion) stimulus package late in the day in a bid to lift growth and inflation. The package includes 7.5 trillion yen in new, direct spending by the national and local governments. Japanese shares fell as the yen held on to its recent gains and banks succumbed to selling pressure after recording big gains in the previous two sessions. Trading in Hong Kong was suspended for the day after a typhoon warning. However, Chinese shares ended higher as real estate shares jumped on encouraging price reports, while small-caps bounced on signs of foreign interest.