In a recent development, the Nifty Bank plunged 1% in trading after the Reserve Bank of India (RBI) implemented stricter norms on personal loans late Thursday. The move has had a significant impact on the market, with Axis Bank, SBI, Bajaj Finance, Bajaj Finserv, HDFC Bank, and ICICI Bank being the biggest underperformers.
On the flip side, Asian Paints, Hindustan Unilever, Nestle, and Mahindra & Mahindra have emerged as the major gainers.
The equity benchmark indices, Nifty and Sensex, initially declined in early trade on Friday, influenced sluggish cues from the Asian markets. However, both indices managed to recover and are currently trading flat, primarily due to the drag from financial stocks.
The decline in the Nifty Bank was primarily attributed to the RBI’s tightening of norms on personal loans for banks and non-banking financial companies (NBFCs). Analysts have predicted that three banks will be most impacted the new regulations, with potential 30-85 basis point impacts on their capital ratios.
A note from Nomura highlighted that the RBI’s move signifies its intention to curb loan growth in these segments, posing a dampener for credit growth in the sector. The impact on capital ratios for banks is estimated to be in the range of 25-80 basis points, with a sharper effect on public sector banks like State Bank of India.
In terms of market performance, Axis Bank, State Bank of India, Bajaj Finance, Bajaj Finserv, HDFC Bank, and ICICI Bank were the leading underperformers, while Asian Paints, Hindustan Unilever, Nestle, Mahindra & Mahindra, Tata Motors, and Titan emerged as the top gainers.
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, expressed concerns about the near-term trends, citing the negative sentiment for financials following the RBI’s action.
Amidst this, the Asian markets witnessed mixed trading, with Seoul, Shanghai, and Hong Kong trading lower, while Tokyo quoted in the green. In the US markets, the day ended on a mixed note on Thursday.
Furthermore, the global oil benchmark, Brent crude, saw an increase of 0.25% to reach USD 77.61 per barrel. It was reported that Foreign Institutional Investors (FIIs) were net buyers, acquiring equities worth Rs 957.25 crore based on exchange data.
To provide context, the Sensex climbed 306.55 points or 0.47% to settle at 65,982.48 on Thursday, while the Nifty gained 89.75 points or 0.46% to reach 19,765.20.
This report includes information from PTI.