Indian markets stage recovery during early afternoon deals

Indian markets staged a sharp recovery during the early afternoon deals, but indices exhibited mixed trend as traders remained cautious amid the resurgence of tensions in the Middle East and the resulting recent spike in crude oil prices, fueling inflation concerns. But fairly tame US consumer price data eased concerns about the outlook for interest rates as inflation rose in line with estimates.

The Sensex traded in green during early noon deals, with investors showing interest in select heavyweight stocks, while the Nifty kept its head below the neutral line despite witnessing recovery, amid foreign outflows and lingering global uncertainty. On the global front, Asian markets were trading mixed; after Producer prices in Japan were up 7.2 percent on year in July. That was shy of expectations for an increase of 7.4 percent and down from the upwardly revised 7.3 percent gain in June (originally 7.1 percent).

The BSE Sensex is currently trading at 77990.08, up by 23.73 points or 0.03% after trading in a range of 77665.89 and 78119.39. There were 17 stocks advancing against 12 stocks declining, while 1 stock remained unchanged on the index.

The top gaining sectoral indices on the BSE were Telecom up by 1.41%, Realty up by 1.35%, Industrials up by 0.65%, FMCG up by 0.58% and TECK up by 0.54%, while Metal down by 1.01%, Basic Materials down by 0.63%, Energy down by 0.31%, Bankex down by 0.19% and Consumer Durables down by 0.18% were the top losing indices on BSE.

The top gainers on the Sensex were Eternal up by 1.84%, Interglobe Aviation up by 1.78%, Bharat Electronics up by 1.67%, Tech Mahindra up by 1.43% and Larsen & Toubro up by 1.34%. On the flip side, Titan Company down by 1.52%, Ultratech Cement down by 1.39%, ICICI Bank down by 0.97%, Adani Ports & SEZ down by 0.95% and Reliance Industries down by 0.95% were the top losers.

Meanwhile, in order to align the policies between Banks and non-banking finance companies (NBFCs), the Reserve Bank of India (RBI) has issued draft rules on harmonised interest rate determination. Currently, the regulatory framework on interest rates on advances is applicable only to commercial banks, while NBFCs are governed largely by conduct-related aspects. To align the policies between banks and NBFCs, RBI has prescribed a broad, principles-based framework for the determination of interest rates on both fixed rate and floating rate loans, commensurate with the nature, complexity, and scale of the operations of the regulated entity. 

These directions will be called as ‘Reserve Bank of India (Interest Rates on Loans and Advances) Directions, 2026’ and are proposed to come into effect from April 1, 2027. The directions will apply only to domestic operations of the regulated entities, and require all regulated entities to have board-approved policies on interest rates on loans and advances, which should be reviewed at least once every year. RBI noted that this policy shall lay down various aspects related to pricing of loans, including microfinance loans. Such aspects shall, inter alia, include the methodology for determining interest rates, including defining the internal benchmark, the components of the spread, the loan categories, and the delegation of powers for loan pricing.

Moreover, a regulated entity shall explicitly put a ceiling on the Annual Percentage Rate (APR), inclusive of the interest rate and all other charges/fees on microfinance loans and small value loans, while ensuring that these are not usurious. For fixed-rate loans, a regulated entity shall determine the interest rate on a fixed-rate loan with reference to its internal benchmark or an external benchmark, plus a risk-based spread; while for floating-rate loans, a regulated entity shall determine the interest rate with reference to its internal benchmark or an external benchmark, plus a risk-based spread.

The CNX Nifty is currently trading at 24390.40, down by 45.55 points or 0.19% after trading in a range of 24311.40 and 24431.60. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Tata Motors Passenger up by 1.66%, Tech Mahindra up by 1.54%, Eternal up by 1.53%, Tata Consumer Products up by 1.47% and Shriram Finance up by 1.27%. On the flip side, Hindalco Industries down by 2.50%, Ultratech Cement down by 1.83%, Grasim Industries down by 1.76%, Titan Company down by 1.53% and ICICI Bank down by 1.37% were the top losers.

Asian markets were trading mixed; Jakarta Composite plunged 61.37 points or 0.96% to 6,312.48, Hang Seng declined 99.17 points or 0.39% to 25,341.00, Straits Times fell 9.34 points or 0.16% to 5,711.41, and Shanghai Composite weakened 19.72 points or 0.5% to 3,926.96, while Taiwan Weighted added 503.41 points or 1.09% to 46,021.48, Nikkei 225 surged 878.94 points or 1.28% to 68,403.00 and KOSPI increased 234.30 points or 3.44% to 6,813.34.