Post Session: Quick Review

Indian equity benchmarks traded in red in tight range for most part of the day in absence of any upside triggers. The selling pressure was visible across IT, TECK and Oil & Gas sector which pulled market lower to end in red for third straight session. The benchmarks made a cautious start and traded slightly in red in early deals on account of selling in frontline blue chip counters tracking rise in crude oil prices in overnight trade. The sentiments were under pressure after Indian rupee fell against the US dollar on account of buying of American currency by banks and importers. Reports of OPEC members considering more production cuts than expected and a drop in US weekly crude inventories pushed crude oil prices to a four-month high. Additionally, world finance leaders decried a growing populist backlash against globalization and pledged to take steps to ensure trade and economic integration benefited more people currently left behind. Their comments at the start of the International Monetary Fund and World Bank fall meetings signaled frustration with persistently low growth rates and the surge of public anger over free trade and other pillars of the global economic system. British pound plunged sending the fourth most-traded currency on the planet to the lowest level in 31 years. There was talk of France’s president pushing for a hard-line approach on Britain’s exit from the European Union and recycled rumors of a fat finger trade, but nothing that would justify a drop of this magnitude.

The downside was however capped with support from IMF’s statement that India’s strong reform push in 2016 is welcome and should continue apace. Adoption of the goods and services tax is poised to boost India’s medium-term growth. It added that as shown by India, progress on reforms could ignite business investment (including already strong FDI inflows), further boosting domestic demand. Meanwhile, NITI Aayog Vice-Chairman Arvind Panagariya stated that India can become a $10 trillion economy in the next 15 years, from the existing $2 trillion, like China did in last one and a half decade. He further added that NITI Aayog is preparing a 15-year vision blueprint which will provide a road map for developing India into a big economic powerhouse with inclusive growth. Panagariya termed India and China as two rare bright spots in an otherwise sluggish world economy.

On the global front, Asian markets ended in red, while the yen gained in Asia on safe-haven demand as the British pound fell sharply on growing concerns over the terms of a break from the European Union following comments by the government earlier this week the formal move would come by March of next year. European stocks were mostly higher, with investors remaining cautious ahead of a key US employment report due later in the day, amid mounting expectations for a US rate hike before the year end.

The BSE Sensex ended at 28054.28, down by 51.93 points or 0.18% after trading in a range of 27964.91 and 28155.68. There were 8 stocks advancing against 22 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.01%, while Small cap index was down by 0.07%. (Provisional)

The few gaining sectoral indices on the BSE were Metal up by 0.87%, Auto up by 0.56% and Bankex up by 0.08%, while IT down by 0.84%, TECK down by 0.60%, Oil & Gas down by 0.54%, Capital Goods down by 0.49% and Realty down by 0.40% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Steel up by 4.34%, Tata Motors up by 2.22%, Bajaj Auto up by 2.10%, Adani Ports & Special Economic zone up by 1.10% and Lupin up by 1.03%. (Provisional)

On the flip side, Asian Paints down by 1.66%, Infosys down by 1.43%, Cipla down by 1.39%, HDFC down by 1.11% and Bharti Airtel down by 1.01% were the top losers. (Provisional)

Meanwhile, the Reserve Bank of India (RBI) has issued separate operating guidelines for Payment Banks (PBs) and Small Finance Banks (SFBs), as the players in the two sectors have differentiated nature of business and focus on financial inclusion. The RBI’s guidelines allows payments banks and small finance banks to use digital banking to open bank accounts while streamlining their risk mitigating norms to make the experiment of differentiated banking a robust one.

According to RBI, PBs can accept only savings and current deposits. The aggregate limit per customer shall not exceed Rs 100,000, as provided in the Licensing Guidelines. PBs will have to maintain a minimum investment to the extent of not less than 75 percent of 'demand deposit balances' (DDB) as on three working days prior to that day, in Government securities/Treasury Bills with maturity up to one year that are recognised by RBI as eligible securities for maintenance of Statutory Liquidity Ratio (SLR). Further, they will maintain balances in demand and time deposits with other scheduled commercial banks, which shall not be more than 25 percent of its DDB as on three working days prior to that day. For product approval, PBs at the time of submitting application for licence should submit to RBI a list of financial products they intend to offer with a clear description. Any new products to be introduced thereafter should be intimated to RBI for information.

The guidelines also says that annual plans for opening of physical access points by the payments bank for the initial five years would need RBI’s prior approval. The first of such plans should be submitted to the RBI before commencement of business. After the initial stabilisation period of five years, and after a review, the RBI may liberalise the requirement of prior approval.

On the other hand SFBs may issue passbooks but should give written/printed proof of the first time deposit, in addition to electronic confirmation; send statement of accounts every six months if passbooks are not issued; provide account information to SMS/e-mail/internet banking and should provide electronic confirmation for each account transaction. RBI also said that SFBs will not be permitted to undertake any para-banking activity except that allowed as per the Licensing Guidelines and the related FAQs issued. Further, SFBs will be permitted to use Interest Rate Futures (IRF) for the purpose of proprietary hedging. Small finance banks will be allowed exemption from the existing regulatory ceiling on inter-bank borrowings till the existing loans mature or up to three years, whichever is earlier. Afterwards, it will be on par with scheduled commercial banks.

RBI had granted in-principle approvals to 11 entities for setting up payments banks (PBs) in August 2015 and 10 for Small Finance Bank (SFB) in September 2015. The capital adequacy framework is same for both type of banks - Minimum Capital Requirement (15 percent) and Common Equity Tier 1-6 percent.

The CNX Nifty ended at 8695.80, down by 13.75 points or 0.16% after trading in a range of 8663.80 and 8723.70. There were 19 stocks advancing against 32 stocks declining on the index. (Provisional)
The top gainers on Nifty were Tata Steel up by 4.36%, Tata Motors - DVR up by 3.67%, Zee Entertainment up by 2.90%, Bajaj Auto up by 2.61% and Tata Motors up by 2.49%. (Provisional)

On the flip side, Bharti Infratel down by 3.08%, Asian Paints down by 1.94%, Eicher Motors down by 1.82%, HDFC down by 1.82% and Infosys down by 1.60% were the top losers. (Provisional)

The European markets were trading mostly in green; UK’s FTSE 100 increased 73.24 points or 1.05% to 7,073.20, France’s CAC increased 0.25 points or 0.01% to 4,480.35, while Germany’s DAX decreased 15.92 points or 0.15% to 10,552.88.

The Asian markets ended in red on Friday as investors awaited the all-important US jobs report due tonight that could bolster the case for a Fed rate hike in 2016. US employment is expected to increase by 168,000 jobs in September after climbing by 151,000 jobs in August. The unemployment rate is expected to hold at 4.9 percent. Japanese stocks slipped after the sterling's selloff spurred risk aversion and supported safe haven bids for the yen in late Asian deals. Further, Hong Kong shares ended lower after disappointing forex reserves data from China. The country's foreign exchange reserves shrank at a faster pace to extend declines for the third consecutive month in September. The Chinese markets remained closed for the Golden Week holidays and will reopen on Monday.