NIFTY DIPS BELOW 19,750 AS BANK, FINANCIAL STOCKS DRAG

Domestic equity benchmarks corrected on Friday, dragged by banks and financial stocks. The Nifty settled below the 19,750 mark after hitting the day`s high of 19,806 in morning trade. Despite an initially positive momentum, the market encountered significant volatility, particularly within the banking and financial services sector. This was primarily influenced by the Reserve Bank of India`s implementation of stricter norms for personal loans and credit cards. On the other hand, defensive plays like pharma, healthcare and FMCG stocks bucked the weak market trend. Some supporting factors for the market include peaking US bond yields and declining Brent crude prices. Additionally, the recent shift of Foreign Institutional Investors (FIIs) turning into buyers is worth noting.

The barometer index, the S&P BSE Sensex slipped 187.75 points or 0.28% to 65,794.73. The Nifty 50 index lost 33.40 points or 0.17% to 19,731.80.

SBI (down 3.64%), Bajaj Finance (down 1.99%) and ICICI Bank (down 1.45%) were major drags.

The broader market surpassed the headline indices, with the S&P BSE Mid-Cap index increasing by 0.27% and the S&P BSE Small-Cap index gaining 0.36%. Both indices reached record highs today, with the S&P BSE Mid-Cap index hitting 33,423.33 and the S&P BSE Small-Cap index reaching 39,690.72.

The market breadth was positive. On the BSE, 1,926 shares rose and 1,813 shares fell. A total of 125 shares were unchanged.

The NSE`s India VIX, a gauge of the market`s expectation of volatility over the near term, advanced 1.54% to 11.83.

Economy:

The Reserve Bank of India (RBI) on Thursday unveiled new regulations aimed at tightening the oversight of unsecured personal loans within the banking and non-banking financial sectors.

The central bank`s decision entails a significant increase in the risk weights for consumer credit exposure of commercial banks, encompassing both existing and new personal loans, by 25% to 125%. It is important to note that these changes are not applicable to housing loans, education loans, vehicle loans, and loans secured by gold and gold jewelry.

Additionally, the RBI has also raised the risk weights on credit card receivables by 25% to 150% for scheduled commercial banks (SCBs) and to 125% for NBFCs.

The new norms, which take immediate effect, are applicable for new as well as outstanding loans.

These adjustments are in line with previous remarks from RBI Governor Shaktikanta Das, who highlighted the swift expansion of specific consumer credit segments. Governor Das emphasized the importance of bolstering internal surveillance mechanisms within banks and NBFCs, addressing risk accumulation, and implementing appropriate safeguards to ensure financial stability.

Numbers to Watch:

The yield on India`s 10-year benchmark federal paper fell 0.30% to 7.211 as compared with previous close 7.232.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 83.2450, compared with its close of 83.2300 during the previous trading session.

MCX Gold futures for 5 December 2023 settlement gained 0.38% to Rs 60,953.

The US Dollar index (DXY), which tracks the greenback`s value against a basket of currencies, was down 0.23% to 104.11.

The United States 10-year bond yield slipped 1.19% to 4.390.

In the commodities market, Brent crude for January 2024 settlement gained 84 cents or 1.08% to $78.26 a barrel.

Global Markets:

European shares advanced, while Asian markets ended mixed on Friday. Weaker U.S. economic data dampened the enthusiasm on Wall Street, leading to a boost in bond prices and a drop in oil prices. Both Brent and U.S. crude declined nearly 5% to reach four-month lows, attributed to concerns about the economy and supply.

In the U.S., the S&P 500 and the Nasdaq saw minimal gains, while the Dow Industrial Average finished slightly lower, influenced by underperformance from tech and retail giants Cisco and Walmart due to disappointing forecasts. Cisco Systems experienced a significant drop in share value as it reduced its full-year revenue and profit forecasts due to slowing demand for its networking equipment.

Additionally, U.S. President Joe Biden and Chinese President Xi Jinping agreed to resume high-level military communication, marking their first in-person meeting in a year. This occurred during the Asia-Pacific Economic Cooperation conference in San Francisco, where the leaders expressed a commitment to direct and transparent communication.

Stocks in Spotlight:

Axis Bank slipped 3.03% and Manappuram Finance fell 3.27%. The Reserve Bank of India (RBI) on Thursday imposed a monetary penalty of Rs 90.92 lakh on Axis Bank and Rs 42.78 lakh on Manappuram Finance, for rule violations.

Kotak Mahindra Bank shed 0.43%. The private lender announced that its board has approved the appointment of Ashok Vaswani as a director and managing director & chief executive officer (CEO) of the bank for a period of three years with effect from 1 January 2024.

JSW Steel shed 0.09%. The company upon considering demand and supply scenario of Iron Ore in India, has withdrawn its application for the Final Mine Closure Plan submitted on 1st September 2023 before the Indian Bureau of Mines for the purpose of surrender of Jajang Iron Ore Block located in the district of Keonjhar, Odisha.

JSW Infrastructure rallied 3.16% after the company has received Letter of Award from Karnataka Maritime Board, Government of Karnataka for development of All- weather, deep water, greenfield port at Keni in Karnataka on Public Private Partnership basis.

Brigade Enterprises added 3.40%. The Brigade Group has signed a joint development agreement (JDA) with Krishna Priya Estates and Micro Labs to develop around 2 million square feet of residential housing in Bengaluru with a Gross Development Value (GDV) of Rs 2,100 crore. 

DCX Systems surged 4.37% after the company�s board has approved the raising of funds for an aggregate amount of up to and not exceeding Rs 500 crore one or more tranches.

PNB Housing Finance rallied 4.09% after the housing finance firm�s board of directors approved issuance of non convertible debentures (NCDs) upto Rs 3,500 crore on private placement basis.

AGS Transact Technologies surged 18% after the company announced the order win of Rs 1,100 crore over 7 years for deploying 2,500+ ATMs under outsourced/managed services portfolio from the State Bank of India (SBI). The company will deploy these ATMs on a Transaction fee basis under the total outsourcing model. The company will begin the deployment of these new ATMs in the next calendar year.

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