FEAR OVER NEW RULES FOR NBFCS DRAGS DOWN STOCK MARKETS
Markets ended at a more than one-week low on Monday, weighed down by nonbank financial companies (NBFCs) on fears over possible tighter rules for the sector, although gains in heavyweights HDFC Bank Ltd and Reliance Industries Ltd capped losses.
The blue-chip NSE Nifty 50 index fell 1.06% to close at 14,281.3, while the benchmark S& P BSE Sensex was down 0.96% at 48,564.27. Both indexes touched their lowest closing level since January 7.
The Reserve Bank of India (RBI) is expected to set out proposals this week where it may recommend that bigger shadow banks maintain a statutory liquidity ratio and a cash reserve ratio, which could be a huge cash drain for the sector, reported on Saturday.
“Any such strict regulations, if implemented at a time when economic growth is very weak, could severely constrain ability of NBFCs to lend and further jeopardise growth,” Macquarie analyst Suresh Ganapathy said in a note to clients.
RBI has been trying to tighten regulatory norms for the sector after the collapse of India’s largest shadow lender IL&FS in 2018, as the sector also recovers from a coronavirus-led slowdown. Shares of the country’s largest mortgage lender HDFC Ltd fell 2.5%, while Bajaj Finance Ltd and Bajaj Finserv Ltd dropped over 3%.
The Nifty Metal Index was the worst performing index, falling 4.1% to its lowest since January 4. HDFC Bank ended up 1.1% at a record closing high, after the private lender on Saturday reported strong profit and loan growth for the December quarter.
Reliance Industries advanced 2.4%. The conglomerate plans to embed its ecommerce app JioMart into WhatsApp within six months.
Dewan Housing Finance Corp rose 5% after the company’s creditors voted for a ₹37,250 crore bid by the Piramal Group.