Markets wipe off gains to trade flat

Erasing all their early gains, Indian benchmarks have turned flat-to-negative in the late afternoon session, as investors’ opted profit taking at select blue chip counter. Weak opening in European counter to dampened sentiment. European markets were trading low on Tuesday following poor results from some firms, including Metro and chipmaker Infineon, and another day of weak performance for the banking sector.

Back home, losses remain capped on hopes the Parliament would pass the Goods and Services Tax (GST) Bill as early as this week and after the country's weather office retained its forecast for above-average monsoon rains this year. In scrip specific development, Indian Bank shares jumped after the bank reported 42.77 per cent rise in net profit at Rs 307.36 crore for the quarter ended June 30, 2016 as compared to Rs 215.28 crore for the same quarter in the previous year.

The BSE Sensex is currently trading at 27978.83, down by 24.29 points or 0.09% after trading in a range of 27978.44 and 28175.22. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.07%, while Small cap index fell by 0.28%.

The  top gaining sectoral indices on the BSE were FMCG up by 1.60%, Consumer Durables up by 0.23%, Auto up by 0.20% and PSU up by 0.04% while, Metal down by 1.17%, Realty down by 0.92%, Power down by 0.65%, TECK down by 0.26% and Bankex down by 0.22% were the losing indices on BSE.

The top gainers on the Sensex were ITC up by 3.27%, Maruti Suzuki up by 2.63%, Hero MotoCorp up by 1.36%, ONGC up by 0.82% and Hindustan Unilever up by 0.80%. On the flip side, HDFC down by 2.77%, Wipro down by 1.60%, GAIL India down by 1.26%, ICICI Bank down by 1.18% and Tata Motors down by 0.95% 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 8634.05, down by 2.50 points or 0.03% after trading in a range of 8631.75 and 8687.20. There were 23 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were ITC up by 3.33%, Maruti Suzuki up by 2.75%, Tech Mahindra up by 2.12%, Hero MotoCorp up by 1.52% and Bank Of Baroda up by 1.42%. On the flip side, Aurobindo Pharma down by 2.90%, HDFC down by 2.86%, Ultratech Cement down by 1.75%, Bharti Infratel down by 1.54% and BPCL down by 1.47% were the top losers.

The Asian markets were trading mostly in red; Nikkei 225 decreased 244.32 points or 1.47% to 16,391.45, Taiwan Weighted was down 11.95 points or 0.13% to 9,068.76, KOSPI Index declined 10.58 points or 0.52% to 2,019.03, FTSE Bursa Malaysia KLCI dropped 5.97 points or 0.36% to 1,659.26. On flip side, Jakarta Composite increased 2.9 points or 0.05% to 5,364.47, Shanghai Composite jumped 17.89 points or 0.61% to 2,971.28, Hang Seng climbed 237.77 points or 1.09% to 22,129.14

The European markets were trading in red; Germany’s DAX decreased 103.29 points or 1% to 10,227.23, France’s CAC decline 54.35 points or 1.23% to 4,354.82, UK’s FTSE 100 down 43.03 points or 0.64% to 6,650.92