Sensex, Nifty remains under pressure

After rebounding into positive territory after a weak spell earlier this morning, Indian equity markets extended losses and turned negative. The BSE benchmark slipped 34 points, while NSE benchmark declined 11 points, but the broader markets outperformed with marginal gains. In currency markets, rupee continued trading positive against dollar as the American currency weakened against euro overseas. On sectoral front healthcare, auto and consumer durables were trading in green, while power, FMCG and capital goods were trading in red. In global markets, Asian shares were trading in red. Back home, the market breadth favoring positive trend; there were 1,249 shares on the gaining side against 1,167 shares on the losing side while 131 shares remained unchanged.

The BSE Sensex is currently trading at 17847.14, down by 38.12 points or 0.21% and touched a high and a low of 17895.79 and 17,800.29 respectively. There were 16 stocks advancing against 14 declines on the index.

The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices up by 0.14% and 0.21% respectively.

The top gaining sectoral indices on the BSE were, HC up by 0.78%, Auto up by 0.53%, CD up by 0.22%, IT up by 0.21% and PSU up by 0.20% while, Power down by 0.48%, FMCG down by 0.43%, CG down by 0.41%, Realty down by 0.39% and TECk down by 0.26% remained top losers on the index.

The top gainers on the Sensex were Dr Reddy up by 1.75%, Hero MotoCorp up by 1.63%, BHEL up by 1.40%, Maruti Suzuki up by 1.22% and Bajaj Auto up by 1.00%.

On the flip side, Bharti Airtel was down by 3.15%, Tata Power down by 1.95%, NTPC down by 1.18%, L&T down by 0.94% and Jindal Steel down by 0.86% were top losers on the Sensex.

Meanwhile, in a bid to prevent the 'unhealthy practices' and distribute risk to a wide spectrum of investors, the Reserve Bank of India (RBI) has tightened the non-banking finance company (NBFC) securitization norm, by setting a 95 per cent cap on the loans it is selling to another company. Thus with the new norm, the NBFC will have to retain a minimum 5 per cent of the loan being sold to another entity, with a further condition of not selling or securitizing a loan unless three monthly installments have been duly paid by the borrower.

In order to prevent unhealthy practices surrounding securitization viz., origination of loans for the sole purpose of securitization and in order to align the interest of the originator with that of the need that originators should retain a portion of each securitization originated. Further, these guidelines are expected to be implemented by NBFCs in two phases by October end.

As per the new guidelines, loan up to two years could be securitized only after three monthly installments have been duly paid by the borrower. The limit for loans between two and five years is pegged at six months and above five years, would be 12 months. With regard to minimum retention requirement (MRR) for securitization, RBI mandated NBFC’s selling loans to retain 5 per cent of the amount, if the loan is for less than two-year period and 10 per cent if it is of over two years.

Further according to the guidelines, NBFCs should formulate policies regarding the process of due diligence to be exercised by their own officers to satisfy the Know Your Customer (KYC) requirements and credit quality of the underlying assets.

The S&P CNX is currently trading at 5,409.75, down by 11.25 points or 0.21% and touched a high and a low of 5,422.60 and 5,394.80 respectively. There were 23 stocks advancing against 26 declines on the index and one remained unchanged.

The top gainers of the Nifty were BPCL up by 2.14%, Ranbaxy up by 1.96%, Dr Reddy up by 1.75%, Hero MotoCorp up by 1.60% and BHEL up by 1.27%.

On the flip side, Bharti Airtel down by 3.23%, Tata Power down by 1.80%, IDFC down by 1.25%, HCL Tech down by 1.19% and NTPC down by 1.15%, were major losers on the index.

Most of the Asian markets were trading in the red; Shanghai Composite was down 0.61%, Hang Seng lost 0.92%, Nikkei 225 declined by 0.27%, Straits Times was down by 0.68%, Kospi Composite was lower by 0.41% and Taiwan Weighted has lost 0.14%.

On the other hand, KLSE Composite was the lone gainer, up by 0.07%.

Jakarta Composite is closed due to Idul Fitri holidays.