Post Session: Quick Review

Indian equity benchmarks ended Monday’s trade on a lower note with losses of over half a percent, on account of rise in crude prices caused by the drone attack on two of Saudi's Aramco facilities. Markets traded in negative note since beginning, following subdued global cues. Sentiments remained dampened with the commerce ministry’s data showing that India's exports dropped by 6.05 per cent to $26.13 billion in August compared to the year-ago month. Imports too declined by 13.45 per cent to $39.58 billion, narrowing trade deficit to $13.45 billion in August. However, key indices trimmed some of their losses in early noon session as finance minister Nirmala Sitharaman announced reforms to boost the export and housing sector in the country. She announced a slew of measures including a new attractive scheme to refund the duties and taxes on exports that will replace all existing schemes in a bid to stimulate exports and the economy. The revenue forgone is projected at upto Rs 50,000 crore.

But, markets failed to trim all of their losses and witnessed sharp sell-off in afternoon deals amid SBI report stating that the contemporary issue for macroeconomists is to exclusively focus on assuring adequate aggregate demand as the current slowdown cannot be tackled by monetary policy in isolation. Traders also took a note of data showing that the annual rate of inflation, based on monthly Wholesale Price Index (WPI) for August 2019, remained unchanged at 1.08% compared to July 2019 and 4.62 percent during the corresponding month of the previous year. A huge depreciation in the rupee against the US dollar too spooked investors.

On the global front, Asian markets ended mostly lower on Monday after the release of weak data from China. Chinese industrial output growth unexpectedly weakened to 4.4% in August from the same period a year earlier, the slowest pace since February 2002 and down from 4.8% in July, while retail sales and investment figures also disappointed amid rising trade pressure and softening domestic demand. European markets were trading in red, as investors digested an escalation of tensions in the Middle East following an attack on Saudi oil production.

The BSE Sensex ended at 37127.73, down by 257.26 points or 0.69% after trading in a range of 37028.94 and 37302.06. There were 7 stocks advancing against 24 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index fell 0.35%, while Small cap index was up by 0.63%.(Provisional)

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.32%, FMCG up by 0.62%, Healthcare up by 0.34%, IT up by 0.25% and TECK up by 0.20%, while Oil & Gas down by 1.68%, Energy down by 1.34%, PSU down by 1.29%, Auto down by 0.90% and Bankex down by 0.89% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tech Mahindra up by 1.48%, ONGC up by 1.24%, Sun Pharma up by 0.84%, Hindustan Unilever up by 0.56% and TCS up by 0.55%. (Provisional)

On the flip side, Mahindra & Mahindra down by 2.51%, SBI down by 2.47%, Yes Bank down by 2.33%, Asian Paints down by 1.87% and HDFC down by 1.81% were the top losers. (Provisional)

Meanwhile, with an aim to expand the banking services through high technology-low cost operations, the Reserve Bank of India (RBI) has proposed a minimum equity capital of Rs 200 crore to set up a small finance bank (SFB) under the 'on tap' licence regime. The objectives of setting up of SFBs are to further financial inclusion and supply of credit through high technology-low cost operations.

Unveiling the draft guidelines for 'on tap' licensing of SFBs in the private sector, the RBI said existing non-banking financial companies (NBFCs), micro finance institutions and local area banks in the private sector, which are controlled by residents, can opt for conversion into small finance banks. It also said proposals from public sector entities and large industrial house/business groups, and autonomous boards/bodies will not be entertained.

Further, in view of the inherent risk of an SFB, it shall be required to maintain a minimum capital adequacy ratio of 15 per cent of its risk weighted assets (RWA) on a continuous basis. The draft also said the promoters should hold a minimum of 40 per cent of the paid-up voting equity capital of the bank, which would remain locked in for five years from the date of commencement of the bank's business.

Besides, it mentioned that after the SFB reaches the net worth of Rs 500 crore, listing will be mandatory within three years of reaching that net worth. Moreover, SFBs having net worth of below Rs 500 crore could also get their shares listed voluntarily, subject to fulfilment of the requirements of the capital markets regulator. The foreign shareholding in the small finance bank would be as per the extant foreign direct investment (FDI) policy for private sector banks.

The CNX Nifty ended at 11004.70, down by 71.20 points or 0.64% after trading in a range of 10968.20 and 11052.70. There were 15 stocks advancing against 35 stocks declining on the index. (Provisional)

The top gainers on Nifty were Titan Co up by 2.39%, Britannia Industries up by 1.84%, Tech Mahindra up by 1.48%, ONGC up by 1.28% and Coal India up by 1.24%. (Provisional)

On the flip side, BPCL down by 7.21%, Mahindra & Mahindra down by 2.60%, SBI down by 2.47%, UPL down by 2.40% and Yes Bank down by 2.26% were the top losers. (Provisional)

European markets were trading in red; UK’s FTSE 100 decreased 9.64 points or 0.13% to 7,357.82, France’s CAC fell 38.47 points or 0.68% to 5,616.99 and Germany’s DAX was down by 87.46 points or 0.7% to 12,381.07.

Asian markets ended mostly lower on Monday after the release of weak data from China. Chinese industrial output growth unexpectedly weakened to 4.4% in August from the same period a year earlier, the slowest pace since February 2002 and down from 4.8% in July, while retail sales and investment figures also disappointed amid rising trade pressure and softening domestic demand. Further, oil prices soared following multiple drone attacks over the weekend on Saudi Arabia's crude oil production facilities. Chinese shares ended mostly flat as trading resumed following a three-day holiday weekend. Though, Seoul stocks advanced as investor anxiety about the US-Chinese tariff war eased and investors remained focused on the upcoming Federal meeting for directional cues. Meanwhile, markets in Japan and Malaysia were closed for public holidays.