Markets pares most of the gains on selling in metals and realty

Markets have pared most of the gains and are trading off the highs of the day, as profit booking emerged in metal, realty and power stocks. The early euphoria on raised hopes of GST Bill passage this week amid fresh buying by investors and foreign funds seemed waning slowly. There were some weak earnings like Interglobe Aviation  that dampened the mood of the markets. The rupee too was trading weak on bouts of dollar selling by banks and exporters, despite paring the early losses, weighing down the sentiments. However, the bullishness in the auto sector stocks after reporting good monthly sales numbers for the month of July kept supporting the markets. The NBFC stocks kept buzzing 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. Muthoot Finance was up by over 6%, Edelweiss Financial Services up by over 4%, Bajaj Finserv was up by around 3% and Manappuram Finance was up by 2%.

Back on street, the defensive FMCG sector was leading the gainers pack on hopes of rise in rural demand with the good progress of monsoon. On the other hand the commodity stocks were reeling in red on weak global leads.

The BSE Sensex is currently trading at 28029.55, up by 26.43 points or 0.09% after trading in a range of 28000.94 and 28175.22. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were showing mixed trend; the BSE Mid cap index was up by 0.28%, while Small cap index was tad lower by 0.01%.

The top gaining sectoral indices on the BSE were FMCG up by 1.82%, Consumer Durables up by 0.46%, Auto up by 0.33%, PSU up by 0.25%, Capital Goods up by 0.20%, while Metal down by 0.54%, Realty down by 0.44%, Power down by 0.33%, TECK down by 0.27%, IT down by 0.12% were the losing indices on BSE.

The top gainers on the Sensex were ITC up by 3.01%, Maruti Suzuki up by 2.14%, Hero MotoCorp up by 1.42%, ONGC up by 0.98% and Hindustan Unilever up by 0.93%. On the flip side, HDFC down by 2.51%, Wipro down by 1.67%, Lupin down by 1.06%, ICICI Bank down by 1.04% and GAIL India down by 0.87% were the top losers.

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 is currently trading at 8640.20, up by 3.65 points or 0.04% after trading in a range of 8635.30 and 8687.20. There were 28 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were ITC up by 3.17%, Maruti Suzuki up by 2.19%, Hero MotoCorp up by 1.59%, HCL Tech. up by 1.25% and Yes Bank up by 1.23%. On the flip side, HDFC down by 2.59%, Aurobindo Pharma down by 2.30%, Ultratech Cement down by 1.61%, Wipro down by 1.55% and Ambuja Cement down by 1.33% were the top losers.

The Asian markets were mostly in red, barring Shanghai Composite which was up by 15.85 points or 0.54% to 2,969.23 and Jakarta Composite which increased by 18.28 points or 0.34% to 5,379.85

On the other hand, Nikkei 225 slumped by 244.32 points or 1.47% to 16,391.45, Taiwan Weighted declined by 11.95 points or 0.13% to 9,068.76, KOSPI Index lost 10.58 points or 0.52% to 2,019.03 and FTSE Bursa Malaysia KLCI was down by 6.02 points or 0.36% to 1,659.21.