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The Indian equity market witnessed volatility during the week, with domestic benchmark indices ending in the red in four out of five sessions. The Nifty50 on Friday closed at 18,114, with more than 1% weekly loss, but investors were prompt to take corrections as a buying opportunity.

The Nifty Bank remained the star performer, crossing the 40,000-mark, with more upside to come in banks. Banks, including PSU banks, were the main sectoral gainers while FMCG, Metals, Realty, Pharma and Auto were the largest losers.

According to experts, immediate support for Nifty50 is coming near the 18,000-mark. If the index manages to hold above the mark, the market can expect a swift pullback. Meanwhile, resistance is seen near 18,250-18,350.

Festival demand outlook, Jul-Sep earnings data backed by recovery in economic activity, vaccination numbers crossing 1 bln mark, developments around Asian markets, healthy FPIs and exports data, strong industrial production data, developments around the US economy, inflation fears, global energy crisis, were key driving factors this week.

Weekly Market wrap up: Know how banks, financials performed this week

Monday Closing bell: Market closes higher for seventh session, Nifty PSU Bank gaining nearly 4%

Extending their winning streak into seventh straight session, Indian indices ended with record gains on Monday, led by banks and financial stocks. The Sensex hit a record high of 61,963, while Nifty touched an all-time high of 18,525 intraday.

At the end of the day’s trade, the Sensex settled 0.75% higher at 61,765, while Nifty50 added 0.76% to close at 18,477. The broader market was positive, with midcap and smallcap stocks also clocking stellar gains.

The Nifty PSU Bank outperformed with nearly 4% gains to close at 2,824. The Nifty Bank index also ended the day with strong gains and ended 0.87% higher at 39,864, while Nifty Financial Services closed 0.46% higher at 19,034. Most of the banking stocks had a good run on Monday after strong numbers posted by HDFC Bank.

Tuesday Closing bell: Dalal Street closes in red, snaps seven-day winning streak

Sensex, Nifty witnessed a volatile session on Tuesday, ending in the red after having touched fresh all-time highs earlier in the day. At the closing bell, S&P BSE Sensex finished 0.08% lower at 61,716, while NSE Nifty 50 ended the day at 18,418, down from an intraday high of 18,604.

Broader markets fared worse than the benchmark indices to end deep in the red as Nifty Midcap 50 closed 2.22% lower, while the Smallcap 50 was down 1.47%

The Nifty Bank index touched 40,000 intraday but closed 0.36% lower at 39,540, while Nifty Financial Services ended flat with positive bias to close 0.18% higher at 19,068. After gaining nearly 4% in the previous session, Nifty PSU Bank Index ended 3.74% lower on Tuesday.

Weekly Market wrap up: Know how banks, financials performed this week

Wednesday Closing bell: Bears pull down benchmark indices, Bank Nifty close flat with marginal losses

Domestic equity indices continued to fall for the second consecutive session on Wednesday amid heightened volatility. S&P BSE Sensex 0.74% lower at 61,259, while the NSE Nifty 50 index fell 0.83% to settle at 18,266.

In broader markets, the BSE Midcap index shed 1.9% to close at 25,915, and the Smallcap index tumbled 2.3% to end at 28,879.

The trend remained largely negative, with only PSU bank indices closing in the green, up 1.54%. Bank Nifty closed flat with marginal loss of 0.6% at 39,518, while Nifty Financial Services closed 0.58% lower at 18,957. SBI, IndusInd Bank, and Bajaj Finance were the top gainers on the Nifty50 index while Bajaj Finserv was among the top laggards.

Thursday Closing bell: Market ends flat with negative bias, banks and financials outperform

A flat recovery, led by select financial shares, helped key benchmark indices recoup some of their losses. BSE Sensex fell over from the day’s high to end below the 61,000-mark at 60,923. The Nifty50 also oscillated between 18,384 and 18,048 during the day before signing off at 18,178.

The broader markets moved in tandem, with the BSE Midcap and Smallcap indices falling 0.4% and 0.7%, respectively.

The Nifty Bank index, meanwhile, ended 1.3% higher at 40,030 after hitting a new record high of 40,200 intra day, while Nifty Financial Services gained 1.22%, closing at 19,188. Kotak Mahindra Bank rallied 6.5% to close as the top Sensex gainer, followed by HDFC, ICICI Bank and SBI.

Stealing the show, Nifty PSU Bank index added nearly 3%, led by Union Bank of India, Indian Bank, Bank of Maharashtra, UCO Bank, and PNB.

Friday Closing bell: Markets end in red for fourth session, banks and financials fare well

Bulls attempted to make a comeback during the early trade on Friday but failed to hold their ground, forcing Dalal Street to close in the red for the fourth day running.

At close, S&P BSE Sensex fell 0.17% to close at 60,821 while NSE Nifty 50 dropped 0.35% to end at 18,114. Midcap and small-cap indices fared worse than largecap peers, lossing more than 1% each.

Bank Nifty index continued to outperform , closing at 40,323, up 0.73%, while Nifty Financial Services closed 0.59% higher at 19,302. Nifty PSU Bank ended the day with a loss of 0.47%.

HDFC was the top Sensex gainer, jumping 2.25%, followed by IndusInd Bank, and Kotak Mahindra Bank. PNB, Power Finance and Chola Invest were among top drags.

Banks and financial services- September quarter results

Weekly Market wrap up: Know how banks, financials performed this week

HDFC Bank: the bank on Saturday reported a standalone net profit of Rs 8,834 crore, up 18% from Rs 7,513 in the year-ago period. Core operating profits came at Rs 15,131.8 crore, up 18.24% YoY and 4.1% Q-o-Q.

HDFC Bank’s net interest income (NII) plus other incomes increased by 14.7% to Rs 25,085.2 crore. GNPAs were at 1.35% of gross advances as on September 30, 2021, as against 1.47% as on June 30, 2021.

Provisions came down 18.8% at Rs 3924.7 crore. The bank’s loans grew 15.5% from a year ago, about three times the banking sector’s rate.

Federal Bank: Private sector lender reported a near 50% jump in net profit for the September quarter on lower provisions and improvement in asset quality even as its total income shrunk.

The net profit stood at Rs 460 crore compared with Rs 308 crore in the year-ago period. Total income fell about 3 per cent at Rs 3,824 crore from Rs 3,937 crore.

Operating profit fell by about 9% at Rs 865 crore from Rs 947 crore over the same period. However, a 54% lower provisions at Rs 245 crore helped the net profit surge.

YES Bank: The bank today reported a 74.3% y-o-y growth in net profit to Rs 225 crore for the said quarter against analysts’ expectations of a Rs 31 crore net loss.

Weekly Market wrap up: Know how banks, financials performed this week

The NII fell 23.4% y-o-y to Rs 1,512 crore. The healthy bottomline performance of the lender was thanks to a sharp decline in provisions. YES Bank’s provisions for bad loans declined 65% to Rs 377 crore.

GNPAs ratio fell to 15% from 15.6% in the previous quarter. Similarly, net NPA ratio came in at 5.5% as against 5.8% in the previous quarter.

Bank of Maharashtra: Net profit jumps 103 % to Rs 264 cr. The bank’s recovery from written-off accounts stood at Rs 340 crore, including Rs 258 from the DHFL resolution. Net interest margin (NIM) improved to 3.27%, GNPA declined 5.56% and Provision coverage ratio improved to 92.38%.

Banks’ recovery and up-gradation stood at Rs 645 crore from Rs 556 crore last year around the same time.

IDBI Bank: The bank on Thursday reported a 75% jump in net profit to Rs 567 crore from Rs 324 crore in the same period of the last fiscal. The NII grew 9% to Rs 1,854 crore, NIM improved to 3.02%, compared to 2.70% in the second quarter last fiscal.

Bank’s GNPAs declined to 20.92% against 25.08% a year ago. Net NPAs improved 1.62% from 2.67%. Provisions for bad loans and contingencies also rose to Rs 434 crore.

Weekly Market wrap up: Know how banks, financials performed this week

HDFC Life Insurance: The life insurer on Friday announced a 15.9% fall in its consolidated net profit to Rs 274.16 crore in Jul-Sep, as against Rs 326.09 crore a year ago.

Total income, however, rose to Rs 20,478 crore against Rs 16,426 crore a year ago, while the net premium income increased by 52% to Rs 11,445 crore from Rs 10,056 crore, the insurer said in a regulatory filing.

Value of new business (VNB) recorded a robust 30% growth to Rs 1,086 crore over last year. Profit after tax on the other hand stood at Rs 577 crore for H1, 26% lower than H1 FY21.

LIC Housing Finance: Net profit for the said quarter fell 69% at Rs 248 crore as compared with Rs 791 crore in the year-ago period. NIM for the quarter dipped to 2 per cent as against 2.20% in the June quarter.

The company’s total income for the quarter was lower at Rs 4,715 crore as compared to Rs 4,982 crore during the year-ago period. The NII was Rs 1,173 crore as against Rs 1,238 crore.

Its total loan portfolio stood at Rs 2.38 lakh crore registering an 1% y-o-y growth. During the quarter, total disbursements grew 29%. Retail home loan disbursements grew 38%.

Weekly Market wrap up: Know how banks, financials performed this week

L&T Finance Holdings: The company on Wednesday reported a 10% decline in its consolidated net profit to Rs 223 crore. Total income fell to Rs 3,134.46 crore as against Rs 3,508.91 crore during the year-ago period.

Rural finance business saw the highest-ever Q2 disbursement at Rs 4,987 crore, a jump of 51% quarter-on-quarter. The total disbursements in the quarter stood at Rs 7,339 crore.

GNPAs stood at 5.74% during the quarter, amounting to Rs 4,796 crore. Debt-to-equity ratio stood at 4.40 in Q2FY22. Capital adequacy improved to 25.16%.



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The Nifty50 index crossing the psychological mark of 18,000 on Monday and Sensex surpassing 61,000 for the first time ever on Thursday marks the most weekly gains since the week ended September 3, and continuation of the bull phase.

The rally is special as it was achieved despite a truncated week, tepid global clues, global energy crisis, inflation threats and muted FII participation.

The Nifty 50 Index closed the week at 18,339, with gains of 2.5% and formed a bullish candle on the weekly chart for the second consecutive week. According to experts, this positive momentum is likely to continue till 18,500 levels in coming sessions. Immediate support for Nifty 50 is seen at 18,200.

Festival demand outlook, Q2 earnings data backed by recovery in economic activity, healthy FPIs and exports data, weak jobs report from the US, inflation fears, global energy crisis, developments around Asian markets, strong vaccination numbers were key driving factors this week.

Monday Closing bell: Benchmark indices close at record highs, led by bank stocks

The Indian benchmark indices erased intraday gains after hitting fresh lifetime highs following weakness in global peers, but managed to close at fresh record levels on Monday, supported by banking and auto stocks.

Nifty50 and BSE Sensex had hit fresh record highs of 18,042 and 60,476, respectively. At close, the BSE Sensex was up 0.13% at 60,136, and the Nifty gained 0.28% to close at 17,946.

The Nifty Bank index hit a new lifetime high of 38,495 in intraday trade before closing 1.4% higher at 38,294 levels. Nifty Financial Services gained 1.39% to close at a fresh high of 18,527, and the Nifty PSU Bank index also gained 0.78%. State Bank of India, Kotak Bank, HDFC Bank, ICICI Bank, were among top index gainers.

Tuesday Closing bell: Another day of fresh record highs, PSU Bank index gains over 3%

Post a volatile session, BSE Sensex and Nifty 50 recorded closing highs on Tuesday. The 30-stock index Sensex gained 0.25% to end at 60,284, while the NSE Nifty 50 index settled just shy of 18,000, at 17,992.

In the broader market, the BSE Midcap index rose 0.54% to 26,700, while the BSE Smallcap index gained 0.46% to finish at 29,893.

Nifty PSU Bank was the top gainer, rising over 3%. The Nifty Bank Index gained 0.59% to close at 38,521, while the Nifty Financial Services index ended 0.33% higher at 18,589. SBI, Bajaj Finserv and Axis bank were among top Sensex gainers, while HDFC Life and ICICI Bank were top laggards.

Wednesday Closing bell : Benchmark indices up for third straight day, end at record highs

The domestic equity market sustained its upbeat mood, supported by a positive global market, and witnessed record breaking moves by the BSE Sensex and Nifty 50 for the fifth consecutive session on Wednesday. At close, the BSE Sensex jumped 0.75% to end at 60,737, and NSE Nifty 50 index settled at 18,161, up 0.94%.

Nifty PSU Bank continued its winning streak to close 0.80% higher at 2,670. The Nifty Bank index gained 0.30% to close at 38,635, while Nifty Financial Services ended the day at 18,652 up by 0.34%. HDFC Bank emerged as one of the top Sensex gainers while SBI Life, Axis Bank and SBI were among the losers.

Weekly Market wrap up: Know how banks, financials performed this week

Thursday Closing bell: Sensex surpasses 61,000 for the first time, Nifty closes above 18,300; banks, financials outperform

Benchmark indices extended the record rally in the sixth consecutive session, with Sensex and Nifty ending at fresh record closing high. At close, the Sensex surpassed the psychological level of 61,000 for the first time ever to close 0.94% higher at 61,305, and the Nifty surpassed 18,300 to close higher at 18,338 gaining 0.97%. BSE Midcap and Smallcap added 0.5% each.

The Nifty Bank index outperformed and closed 1.83% higher at 39,340, while Nifty Financial Services closed at 18,949 up by 1.58%. PSU Bank also finished higher at 2,716 gaining 1.74%.

Index heavyweights such as HDFC Bank rose the highest, up 2.9%, followed by ICICI Bank, HDFC, and State Bank of India, among others, contributed the most to the indices’ gain.

Key Takeaways

India may log close to double-digit growth this year, says FM Nirmala Sitharaman

Weekly Market wrap up: Know how banks, financials performed this week

India is looking at close to near double-digit growth this year and the country will be one of the fastest-growing economies, Finance Minister Nirmala Sitharaman has said.

The minister also emphasised that she expects the economic growth next year to be in the range of 7.5-8.5 per cent, which will be sustained for the next decade.

“As regards the growth of India, we are looking at near to double-digit growth this year and this would be the highest in the world. And for the next year, on the basis of this year, (the) growth would definitely be somewhere in the range of eight (per cent),” Sitharaman said here on Tuesday during a conversation at Harvard Kennedy School.

Four Indian banks rise in Asian rankings on stock market boom

Four Indian banks have featured among the 20 largest banks in the Asia-Pacific region in terms of market capitalisation in the third quarter of 2021, according to S&P Global Market Intelligence.

HDFC Bank was ranked seventh with a market cap of $119 billion, a quarter on quarter increase of 6.7% while the next was ICICI Bank at 12th spot, with its market cap rising 11.2% quarter on quarter to $65.5 billion.

The State Bank of India rose two spots to 17th on the list as its market cap rose 8.1% to $54.5 billion. Kotak Mahindra Bank’s market capitalisation rose 17.5%, the highest on the list.

UCO Bank’s Atul Kumar Goel elected as IBA chairman: Sources

Atul Kumar Goel has been elected as the chairman for Indian Banks’ Association for 2021-22, sources said. Goel will be succeeding Rajkiran Rai G, who is also the managing director and chief executive officer of Union Bank of India.

Goel is currently heading UCO Bank as its MD & CEO. The government had extended his tenure for two years till November 1, 2023. His term was originally scheduled to end on November 1, 2021.

Last month, Banks Board Bureau recommended Goel for the managing director and chief executive officer position of Punjab National Bank, after interviewing 11 candidates.

Life insurance industry at risk of sharply rising rates: IMF

Weekly Market wrap up: Know how banks, financials performed this week
The life insurance industry is at risk if there is a sharp rise in bond yields, with an extreme situation potentially causing insurers to liquidate investments reaching $1 trillion in the United States and Europe, the International Monetary Fund warned on Tuesday.

Vulnerabilities have increased for life insurers, the IMF said in its Global Financial Stability Report, noting the industry is at the “center of fixed income markets” owning about 20% of global bonds and 30% of credit investments. Life insurers have long-dated liabilities and are a critical source of demand for bonds with long maturities, wrote the IMF’s Fabio Cortes and Deepali Gautam in the report.

NBFCs set to recover from Covid blues in Q2, post rise in loan demand, collections
Non-bank lenders and housing finance companies, which suffered during the first quarter of this fiscal, are likely to report a steady recovery in asset quality and demand for fresh loans along with improved payment collections in the September quarter.

“The first quarter of fiscal 2022 was impacted by the second Covid wave. Relative to 1QFY22, we expect disbursement volumes of 170-230% for most Affordable Housing/Vehicle Financiers. Impact on AUM growth is likely to be higher for short duration products like Vehicle loans as collections held up well in 2QFY22, Motilal Oswal Securities said in a note.

Banks set for a sharp earnings rise in Q2, may face asset quality jitters

Weekly Market wrap up: Know how banks, financials performed this week

Indian banks’ earnings are likely to pick up in the September quarter, led by a recovery in business growth, fee income and a gradual reduction in credit costs. ICICI Bank could deliver 16.6% year-on-year loan growth, while Axis Bank and Kotak Mahindra Bank could grow over 9% each. SBI may post decline in bad loans.

However, they may be tempered by higher provisioning in the retail and small and medium enterprises (SME) loan segments that have seen higher delinquencies.



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The domestic equity market was in a cheerful mood on Friday as the Reserve Bank of India’s Monetary Policy Committee decided to maintain status quo on key policy rates and retain an “accommodative” stance till evidence of durable growth appears.

It was RBI Governor Das’s comments on the future course of monetary policy action, ramping up of economic growth and elevated inflation that cheered investors.

The benchmark indices extended rally for second consecutive session on Friday, and as a result the market closed higher in four out of five sessions this week.

Festival demand outlook, RBI monetary policy, Q2 earnings data backed by recovery in economic activity, US President’s recovery, weak cues from Asian markets, Evergrande crisis, developments around US economy and strong vaccination numbers were key driving factors this week.

Monday Closing bell: Benchmark indices snap four-day losing streak, end almost 1% higher each

Dalal Street staged a strong comeback on Monday, recouping some of last week’s losses, as benchmark indices each ended almost 1% higher. At close, the Sensex and Nifty50 were up 0.91% at 59299 and 17691, respectively.

The broader markets, too, ended the day in the positive territory, with the BSE Midcap gaining 1.51% and BSE Smallcap 1.71%.

The Nifty PSU Banks outperformed gaining 2.10%, the Nifty Bank ended 0.95% higher at 37,579, and the Nifty Financial Services ended 0.96% higher at 18,312. Bajaj Finserv, SBI and Bajaj Finance were among the top gainers.

Tuesday Closing bell: Indices volatile, each end nearly 1% higher

Domestic equity indices started the day flat with negative bias but bulls asserted control as the day progressed, forcing headline indices to surge higher. S&P BSE Sensex closed 0.75% higher at 59,744, while the Nifty50 jumped 0.74% to end at 17,822.

The broader markets underperformed, with the Midcap index almost unchanged and Smallcap index ending with gains of 0.4%.

After a volatile session, the Nifty PSU Bank index ended 0.44% lower at 2,542 points, breaking its six-day winning streak. The Nifty Bank gained 0.43% to close at 37,741, while Nifty Financial Services ended 0.30% higher at 18,367. IndusInd Bank soared 5% to end as the top Sensex gainer, while Bajaj Finance and Bajaj Finserv were among the top laggards.

Wednesday Closing bell : Benchmark indices fell 1% amid weak global cues

Domestic benchmark indices traded with gains most of Wednesday but failed to sustain the highs and closed deep in the red. At close, the Sensex was down 0.93% at 59,189 and the Nifty was down 0.99% at 17,646.

Broader markets were also volatile, with BSE Midcap index falling 0.5% and Smallcap index ending with more than 1% loss.

The Nifty PSU Bank highly underperformed the day, losing 1.94%, while Nifty Bank slipped 0.58% ending at 37,521. Nifty Financial Services closed 0.32% lower at 18,309.

Only three of thirty Sensex constituents closed with gains. HDFC Bank was the top gainer, jumping 1.24%, followed by Bajaj Finance and HDFC. Deep down in red was IndusInd Bank, down over 3%.

Weekly Market Wrap Up: Know how banks, financials performed this week

Thursday Closing bell: Nifty ends near 17,800, Sensex jumps 0.80% ahead of RBI policy

The Nifty had a sharp bounce after a steep decline the previous day. After opening in the green, Nifty maintained the lead and closed with a gain of 0.85% at 17,796, while Sensex ended the day with a gain of 0.80% at 59,667.

Except oil and gas, all other sectoral indices ended in the green, the BSE midcap and smallcap indices outperformed adding over 1% each.

The Nifty PSU Bank Index recovered from the previous day’s losses to end 0.64% higher at 2508. Nifty Bank was able to end above the 37,700-mark, gaining 0.62% to close at 37,753, while Nifty Financial Services closed 0.15% flat with positive bias at 18,336. Induslnd Bank made its way back among the top gainers, while HDFC was among the worst performing Sensex constituents.

Friday Closing Bell: Sensex ends above 60,000 post RBI MPC meet outcome

Benchmark indices ended over half a percent higher each on Friday as investors cheered the outcome of the RBI MPC meet. BSE Sensex ended 0.64% up at 60,059, while the NSE Nifty 50 settled at 17,895, up 0.59%.

The Nifty PSU Banks outperformed and soared 1.65% to end at 2,550. The Nifty Bank ended flat, with a positive bias at 37,755, up 0.06%, while the Nifty Financial Services index ended in the red at 18,289, down 0.34%. Piramal Enterprises was the worst performing Sensex stock, down more than 5%, followed by ICICI Prudential and Kotak Mahindra Bank. Axis Bank and Bajaj Finserv were among top gainers.

Key Takeaways

RBI keeps key policy rates unchanged in Oct MPC meet

The Reserve Bank of India today decided to maintain status quo on key policy rates, for the eighth time in a row, in its bi-monthly Monetary Policy Committee meeting.

The repo rate remains unchanged at 4%, while the reverse repo rate at 3.35%. The central bank also decided to maintain accommodative stance.The central bank has also kept the MSF and bank rates steady at 4.25 percent.

The central bank has cut CPI inflation forecast for FY22 to 5.3 percent from 5.7 percent, while it has retained FY22 GDP growth forecast at 9.5 percent.

For Q2FY22, RBI expects GDP at 7.9 percent, up from 7.3% earlier, for Q3 , at 6.8%, up from 6.3%, while for Q4 and Q1FY23, RBI has retained its projection of 6.1% and 17.2%, respectively.

For CPI inflation, RBI expects 5.1%, from 5.9% earlier in Q2, while 4.5% from 5.3% in Q3, and retained the projection at 5.8% for Q4. For the first quarter of FY23, RBI sees CPI at 5.2%, up from 5.1% projected earlier.

Life insurance companies poised for strong Q2

Weekly Market Wrap Up: Know how banks, financials performed this week

Indian life insurance companies are poised to post up to 34% growth in the value of premiums, paced by higher volumes, group insurance coverage and sale of fixed-income linked coverage products.

However, margin expansion could be restrained due to a rise in reinsurance rates. Analysts are also monitoring residual Covid-linked claims in the second quarter after a sharp jump in the first quarter that led to a rise in provisions.

Elara Securities expects the top four life insurers – HDFC Life, ICICI Prudential Life, Max Life and SBI Life – to post an annualised premium equivalent (APE) growth of between 14% and 34% in the second quarter.

RBI moves NCLT against SREI Equipment Finance and SREI Infra

The Reserve Bank of India has taken the Srei Infrastructure Finance and Srei Equipment Finance to the National Company Law Tribunal’s Kolkata bench on Friday, a day after the Bombay High Court rejected a writ petition by Srei group promoter Hemant Kanoria against the central bank move to supersede the boards of the company.

This is on expected line as the central bank had announced on October 4 that it would take steps to refer the Srei case to the bankruptcy court.

Govt may allow 20% foreign investment in LIC IPO

Weekly Market Wrap Up: Know how banks, financials performed this week

India is considering a proposal for foreign investors to own as much as 20% in Life Insurance Corporation, according to a person with knowledge of the matter, which would enable them to participate in the nation’s biggest initial public offering.

Under discussion is a plan to amend FDI rules so that investors can pick up the stake without the government’s approval under the so-called automatic route, the person said, asking not to be identified as the deliberations are private.

While FDI of as much as 74% is permitted in most Indian insurers, the rules don’t apply to LIC because it is a special entity created by an act of parliament.

Insurers can maintain current a/cs in appropriate number of banks: Irdai

Insurance regulator Irdai on Wednesday said insurers can maintain current accounts in an appropriate number of banks for premium collection and policy payments for the convenience of policyholders and ease of doing business. Insurance Regulatory and Development Authority of India (Irdai) has issued the clarification in the backdrop of the RBI’s circular on “Opening of Current Accounts by Banks – Need for Discipline”.

In the August 2020 circular, the RBI had instructed banks not to open current accounts for customers who have availed of credit facilities in the form of cash credit (CC) / overdraft (OD) from the banking system.

Moody’s affirms ratings of 9 Indian Banks, changes outlook to stable

Weekly Market Wrap Up: Know how banks, financials performed this week

Global rating firm Moody’s on 6 October, affirmed the long-term local and foreign current deposit ratings of Axis Bank, HDFC Bank, ICICI and State Bank of India at Baa3, following sovereign rating action. At the same time, their rating outlooks have been changed to stable from negative.

This rating action is driven by Moody’s recent affirmation of the Indian government’s Baa3 issuer rating and change in outlook to stable from negative.

Moody’s also affirmed the long-term local and foreign currency deposit ratings of Bank of Baroda, Canara Bank, Punjab National Bank and Union Bank of India. The rating outlooks of these banks has also been changed to stable from negative.



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The Indian market seems to be in roaring bull phase, with the BSE Sensex hitting 60,000 points for the first time ever on Friday. However, the market did face some volatility this week, but investors were prompt to take the corrections as a buying opportunity.

The Sensex completed a 10,000-point journey to the 60,000-mark within months, having hit 50,000 in intraday trade for the first time in January 2021.

This is almost a global phenomenon, with China, Hong Kong and a few other countries being among exceptions as they reel in the budding Evergrande crisis. The mother market US, is leading the bulls, dismissing tapering indications from the US Federal Reserve.

Stock-specific moves, developments around China’s economy, US Fed meeting, revival of activity in Europe, improving economic data, strong vaccination numbers and healthy pick up in daily inoculations were considered to be key driving factors this week.

Monday Closing bell: Dalal Street painted red, banks and financials highly underperform

The BSE Sensex closed the day 525 points lower at 58,491. During the day, it touched a high of 59,203 and a low of 58,390. Only six of the 30 Sensex stocks ended in the green, while the Nifty50 fell 1.07% to end below the 17,400-mark at 17,396.

Broader markets also languished in trade, ending the day with deep cuts. The BSE MidCap fell 1.79% and SmallCap was down 1.84%.

The Nifty PSU Bank index majorly underperformed, closing down 4.18%. Nifty Bank ended 1.76% lower at 37,175, while Nifty Financial services ended 1.61% lower at 18,177. Bajaj Finserv was among the top Sensex gainers while SBI, Induslnd Bank and HDFC were top laggards.

Tuesday Closing bell: Indices witness smart recovery, end in green

The Indian market witnessed a smart recovery after Monday’s fall on the back of a recovery in US futures and Europe markets. At close, the Sensex was up 0.88% at 59,005, and the Nifty50 was up 0.95% at 17,562. BSE MidCap index rose nearly 1%, while the SmallCap ended flat with a positive bias.

Nifty PSU Bank ended flat with a negative bias, down by 0.05%. Bank Nifty staged a recovery to end at 37,235, with gains of 0.24%, while Nifty Financial services ended 0.73% higher at 18,310. Bajaj Finance was the top Sensex gainer on closing, up 5%, followed by IndusInd Bank and Bajaj Finserv were top Nifty gainers.

Wednesday Closing bell : Indices end flat with negative bias, banks, financials underperform

Benchmark indices Sensex and Nifty50 witnessed a tug-of-war between bulls and bears on Wednesday before closing with marginal losses. On the closing bell, BSE Sensex settled at 58,927, down 0.13% while the NSE Nifty50 closed at 17,546, slipping 0.09%.

The Nifty PSU Bank finished the day with 0.48% gains. Bank Nifty slipped 0.78% giving up 37,000 mark at 36,944, while Nifty Financial Services closed 0.86% lower at 18,152. HDFC was the worst-performing Sensex constituent, falling 1.39%, followed by ICICI Bank, Kotak Mahindra Bank and HDFC Bank.

Weekly Market Wrap Up: Know how banks, financials performed this week

Thursday Closing bell: Indices end at all-time highs; banks, financials gain over 2% each

Indian benchmark indices extended early gains and hit record high levels with the Sensex closing at 59,885, up 1.63%, and Nifty50 at 17,823, up 1.57%. The broader market outperformed the benchmarks, as BSE MidCap and SmallCap indices rose 1% each.

Bank Nifty surged 2.24% to close at 37,771, while Nifty Financial Services closed 2.28% higher at 18,566. Nifty PSU Banks finished the day with 1.19% gains. Bajaj Finserv, HDFC, Axis Bank, IndusInd Bank, State Bank of India were top Sensex gainers

Friday Closing Bell: Fresh record closing highs; Nifty ends above 17,850, Sensex crosses 60K.

The BSE Sensex crossed 60,000 for the first time ever, while the Nifty50 closed above the 17,850 level. At close, the Sensex was up 0.27% at 60,048 and the Nifty50 was 0.17% higher at 17,853. BSE MidCap index fell 1%, while smallcap index was down 0.3%.

Bank Nifty gained 0.16% to end at 37,830, while Nifty Financial Services ended at 18,630, up 0.34%. HDFC Bank, ICICI Bank and HDFC were among the top index gainers. SBI, Axis Bank and Bajaj Finance were among top laggards. The Nifty PSU Bank index shed 1.62%, dragged by losses in shares of Bank of Baroda and Canara Bank.

Key Industry takeaways

Kotak Mahindra Bank forays into healthcare financing

 Weekly Market Wrap Up: Know how banks, financials performed this week

Kotak Mahindra Bank (KMBL) on Tuesday announced that it has launched healthcare financing solutions, ranging from healthcare infrastructure loans, medical equipment finance and unsecured healthcare loans, aiming to cater to key stakeholders.

KMBL has introduced the offerings at attractive interest rates, and includes lending facilities such as the Insta Programme for quick approval of loans up to Rs 50 lakh.

Retail depositors earning negative returns; equities boom gives leeway to raise rates: SBI

Weekly Market Wrap Up: Know how banks, financials performed this week

The current bull run in financial markets is possibly a break from the past as households and now the opportune time to revisit the taxation of interest on bank deposits, said SBI.

Economists believe that, Retail depositors are earning negative returns on their bank deposits and hence, there is a need for reviewing taxes on interest earned.

If not for all the depositors, the taxation review should be carried out for at least the deposits made by senior citizens who depend on the interest for their daily needs, the economists led by Soumya Kanti Ghosh said in a note, which pegged the overall retail deposits in the system at Rs 102 lakh crore.

IIFL Finance to raise up to Rs 1,000 crore via secured bonds

Weekly Market Wrap Up: Know how banks, financials performed this week

Fairfax-backed IIFL Finance plans to raise a Rs 1,000-crore public issue of secured bonds on September 27 for business growth and capital augmentation. The bonds offer up to 8.75% yield and are rated AA/Stable by Crisil and AA+/negative by Brickwork.

The size of the issue is Rs 100 crore, with a green-shoe option to retain over-subscription up to Rs 900 crore (aggregating to a total of Rs 1,000 crore).

“The funds raised will be used to meet the credit need of more such customers and accelerate our digital process transformation to enable a frictionless experience,” IIFL Finance CFO Rajesh Rajak said.

Govt may block Chinese investment in LIC IPO as company a ‘strategic asset’

Weekly Market Wrap Up: Know how banks, financials performed this week

The government wants to block Chinese investors from buying shares in Life Insurance Corp (LIC), underscoring tensions between the two nations. State-owned LIC is considered a strategic asset, commanding more than 60% of India’s life insurance market with assets of more than $500 billion.

India has sought to limit Chinese investment in sensitive companies and sectors, banned a raft of Chinese mobile apps and subjected imports of Chinese goods to extra scrutiny.

“With China after the border clashes it cannot be business as usual. The trust deficit has significantly widen(ed),” a government official said, adding that Chinese investment in companies like LIC could pose risks, according to a report.

Govt extends Uday Kotak’s term as IL&FS chairman by 6 months

Weekly Market Wrap Up: Know how banks, financials performed this week

The government on Wednesday extended the term of Uday Kotak as non-executive chairman of debt-ridden IL&FS group by another six months.

The government through a gazette notification extended the term of Kotak, who is also the managing director and chief executive officer of Kotak Mahindra Bank, till April 2, 2022.

The notification was issued by the department of financial services in the ministry of finance dated September 21, 2021.



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Know how banks, financials performed this week, BFSI News, ET BFSI

Personal Finance

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Domestic benchmark indices Sensex and the Nifty snapped their 3-day winning run yesterday, of which state-owned banks were among the major losers. The market has been showing signs of correction, with investors resorting to profit booking after a stellar record-setting spree.

Among sectors, public sector banks lost the most, while private banks gained the most today.

On Friday, banking and financial services stocks were in focus after Finance Minister Nirmala Sitharaman announced the much-awaited bad bank.The Nifty Bank scaled the crucial 38,000-level mark for the first time ever, and a fresh lifetime high of 38,112.75.

The BSE Sensex has gained around 9% over the last month. Stock-specific moves, weak cues from Asian markets, inflation data, revival of economic activity in Europe, improving economic data and healthy pick up in India’s daily inoculations were considered key driving factors this week.

Monday Closing bell: Indices end flat on negative bias, Nifty Bank falls

Domestic equity indices ended in the red on Monday, with BSE Sensex down 0.2% at 58,177 points and Nifty 50 down 0.08% at 17,355. However, mid and smallcap stocks outperformed other sectors, with BSE Midcap index closing 0.32% higher and the smallcap index ending with a gain of 0.80%.

Nifty Bank and Nifty Financial Services closed 0.58% and 0.19% lower, respectively. ICICI Bank, HDFC Bank and SBI Life Insurance were top laggards among Sensex stocks, while Kotak Mahindra Bank, Bajaj Finserv, Chola Invest and Power Finance were top gainers.

Tuesday Closing bell: Indices end with mild gains, broader markets outperform

The BSE Sensex closed at a high of 58,247 points, up 69 points, and the Nifty 50 rose 25 points to end at 17,380, a record closing high for the benchmark. Broader markets outperformed the benchmarks as both mid and small-caps were up 1% each.

Bank Nifty opened higher and made an intraday high of 36840 but failed to sustain higher levels. It closed with a gain of 0.38%, and Nifty Financial Services closed at 18,103, down 0.13%.

Weekly Market Wrap Up: Know how banks, financials performed this week

Wednesday Closing bell : Sensex, Nifty end at record closing highs

Headline indices Sensex and Nifty 50 ended at record closing highs, with both indices up nearly 1% each. The Sensex closed at 58,723 points, up 0.82%, while Nifty closed the day at 17,519, up 0.80%. BSE Midcap and Smallcap indices closed 0.65% and 0.86% higher, respectively.

Nifty Bank closed 0.65% higher at 36,852, while Nifty Financial Services ended at 18,158, up 0.30%. SBI, IndusInd Bank and HDFC were among the top gainers, while Axis Bank and HDFC Bank were among the top laggards.

PSU bank index jumped 2.83% with J&K Bank, Bank of Baroda, IOB, Indian Bank gaining 2.7% each.

Thursday Closing bell: Market closes at record highs again; banks, financials outperform ahead of FM announcement

Domestic benchmark indices ended at record closing highs on Thursday. Banks and financials outperformed all the sectors, ahead of Financial Minister Nirmala Sitharaman’s bad bank announcement.

BSE Sensex jumped 418 points to end above 59,100 mark for the first time at 59,141, while the Nifty 50 index ended at 17,629.50, rising 0.63%. BSE Midcap and Smallcap indices also hit their fresh record highs intraday, and closed 0.48% and 0.08% higher, respectively.

Among sectors, the Nifty PSU Bank index jumped 5.43%, while the Nifty Private Bank index clocked a gain of 2.67% . The Nifty Bank index rose 2.22%, while Nifty Financial Services gained 1.09%. Induslnd Bank emerged as the top gainer jumping 7% followed by SBI, Kotak Mahindra Bank, ICICI Bank, Axis Bank and HDFC Bank.

Friday Closing Bell: Sensex and the Nifty snapped 3-day winning streak, PSU banks gain

Having scaled fresh highs in early deals, benchmark indices lost steam as investors were seen booking profits after the three-day winning streak. Losses were led by PSU banks, auto, pharma stocks. BSE Sensex ended 0.21% lower at 59,016, while the Nifty 50 index fell 0.25% to settle at 17,585. BSE Midcap index fell 1.14% and the BSE Smallcap index closed 1.06% lower.

Bank Nifty ended at 37,811, up 0.38%, while Nifty Financial Services rose 0.65% ending at 18,476. Nifty PSU Bank index fell more than 3%, with Bank of Baroda losing 4.37%, by IOB, UCO Bank and Bank of India.

Key Industry takeaways

Retail inflation softens to 4-month low in August at 5.3%

Weekly Market Wrap Up: Know how banks, financials performed this week
Retail inflation based on Consumer Price Index (Combined) eased to a four-month low of 5.3% in August due to moderation in food prices along with a high base effect, data released by the National Statistical Office (NSO) on 13 September showed.

The August inflation print is within the targeted range of 2±4 per cent of the Reserve Bank of India (RBI) though this is the seventh consecutive month of an inflation print higher than 5 per cent and 23rd consecutive month of it being above the RBI’s target of 4%.

SREI’s Rs 35,000-crore loan may be classified as NPA

Banks may classify Rs 35,000 crore loan given to SREI group as Non Performing Asset (NPA) by the end of this quarter after the National Company Law Tribunal (NCLT) set aside the previous order restraining banks from such classification.

According to analysts’ estimates, Indian Bank and Canara Bank have exposures of Rs 2,000 crore and Rs 1,200 crore, respectively, to Srei group, while ICICI Bank and Axis Bank have Rs 800 crore each.

Sebi proposes to tighten timeline for filing settlement applications

The Securities and Exchange Board of India on Tuesday proposed to tighten the timeline of settlement mechanism, whereby it suggested fixing the total timeframe for filing the application at 60 days after receipt of the notice to show cause.

The total timeframe for filing the application for settlement may be fixed at 60 days of the date of receipt of the show-cause notice or the supplementary notice, whichever is later, Sebi said in a consultation paper.

Finance Minister Sitharaman announces bad bank

Weekly Market Wrap Up: Know how banks, financials performed this week
Finance Minister Nirmala Sitharaman announced the much-awaited bad bank on Thursday, and said that the Union Cabinet approved on Wednesday the sovereign backing of up to Rs 30,600 crore for the securities receipts.

The planned National Asset Reconstruction Company Ltd (NARCL) will issue securities receipts to banks as it takes on non-performing assets from their books. These securities receipts will be valid for five years.

Mahindra Finance enters vehicle leasing and subscription business

Mahindra & Mahindra Financial Services Ltd announced on Thursday, its entry into vehicle leasing and subscription business, under the brand name ‘Quiklyz’.

Under this model, consumers can pay a monthly fee to access a vehicle of their choice across all car brands, at a lower price as against regular ownership.

IDFC Board approves initiating steps to divest mutual fund business:

Weekly Market Wrap Up: Know how banks, financials performed this week
The board of directors of IDFC Ltd and IDFC Financial Holding Co Ltd at their meetings held on Friday have considered and approved to initiate steps to divest its mutual fund business subject to requisite regulatory approvals, as applicable.

The boards have authorised respective strategy and investment committees to take necessary steps, including appointment of investment banker, for the same.



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India’s banking sector survives covid scare but needs to address these challenges now

Banking & Finance

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The Indian banking sector is resilient, sufficiently capitalized and well-regulated segment.

By Brajesh Kumar Tiwari

In the last parliament session, the Union Cabinet cleared changes (Deposit Insurance & Credit Guarantee Corporation Bill 2021) to the deposit insurance laws to provide funds up to Rs 5 lakh to an account holder within 90 days in the event of a bank coming under the moratorium imposed by the RBI. The government has also permitted raising the deposit insurance premium by 20 per cent immediately, and maximum by 50 per cent. 

The Indian banking sector is resilient, sufficiently capitalized and well-regulated segment. Over the last 7 years the NDA government has been infusing capital into the public sector banks using recapitalization bonds. However, following COVID and the expectations from the Union Budget 2021-22, liquidity has become a huge issue. Since the last few years, several European banks have confirmed certain disposal operations of impaired loans. This has largely contributed to a significant reduction of the NPL ratio. However, the birth of a huge secondary market for bad debts and the unification of standardized large-ticket assets in order to construct a ‘single-name’ portfolio has given way to newer problems. In fact, the banking sector is silently reeling under the challenges thrown towards it, which are:

Maintaining Capital Adequacy:  The capital a bank sets aside for its rainy day or to undertake lending activities acts more like the bank’s risk threshold.  However, in the post-COVID world banks are facing fresh ambush of NPAs on unsecured loans. Earlier RBI has offered moratorium on loans and has also announced the two-year restructuring on loans to safeguard weak borrowers, but this situation hints at the NPAs increasing from 7.5 per cent in September last year to 13.5 per cent by September this year, putting a lot of stress on banks. Unless the government pumps in money externally, banks will be in severe loss creating massive capital adequacy problems. Bad loans and in failing with maintaining the minimum RBI prescribed Capital Adequacy Ratio, banks will have to face severe challenges in due course. Moreover, the Basel IV standards that limit the reduction in capital is due to be formalized in January 2023. Earlier, following the global financial crisis of 2007-08 the international implementation of Basel III was formalized and that has already raised the capital adequacy quotient for banks in order to mitigate risks. Now, Basel IV, according to global banks will raise the bar of capital further, which is definitely a sign of worry for India, given its present state. 

Maintaining Asset Quality: Bad loans are a big problem for the Indian banking sector, especially the PSBs. As per an IMF report 36.9% of the total debt in India is at risk and banks have capacity to absorb only 7.9% loss. Add the COVID crisis to this and the banks are struggling to recover loans from small businesses, which have been severely affected by COVID. The pandemic has put a halt in business all across, so loan recovery is a big question mark, which definitely hurts the banking sector as they struggle to maintain the quality of their assets.   

Maintaining Growth: The overall economic growth of the country is shunted at the moment and an outward push can only help every contributing sector of the economy –corporates, retail, and rural prominently. The growth impetus is financial at the moment and the sooner the sectors recover, the healthier it will be for the banking sector. As of now, the banking sector has no way of fulfilling its growth aspirations and is barely struggling to stay on ground. 

Keeping these top 3 challenges in mind, here are a few suggestions for the banking sector in India, which will help them revive their status.

Things to work out in short term

  • Restructuring: RBI’s restructuring guidelines on loans for individuals and businesses not only work as a relief for the borrowers, but it also gives a scope to banks to maintain their status quo. Banks should use this relief period to improve their asset quality while continuing being a pillar of support to the MSMEs. This restructuring is RBI advised and the framework keeping in mind the benefit of the banks and customers have been specially devised and has come in to effect since April 1, 2021. Since the regulatory guidelines for the loan restructuring are RBI directed so the implications of customers delaying payments will not come harshly on the banks. This gives the financial institutions a chance to reorient themselves. 
  • Lower interest rates on loans: The COVID crisis has pushed the economy to go off track and financial shortages is an evident problem all across. Constant cash flow is a problem with both the service sector and as well as individuals. Indian banking sector should use this premise to their credit and begin offering lower interest rate loans to individuals and MSMEs. This will encourage lending, which will stimulate overall economic growth and give banks a chance to improve on their CAR. Reform has already started in the home loan finance space, interest rates for home loans in India at present have fallen to historic lows. What was around 8.40% during September 2019 is now at 6.49-6.95% range.
  • Improved diligence: While it is necessary to pump in more money in to the system to help sustain businesses and to boost the economy, it is also equally a necessity to keep bad loans at bay. Bad loans lead to higher NPAs over time, so due diligence has to be observed when offering funds. This will help keep frauds and unscrupulous people at distance and the banks will then be able to extend money to rightful and needy businesses or individuals. Proper scrutiny and stringent application measures will help avoid wrongdoings. Moreover, banks should be cautious when giving loans to Indian companies who have heavily borrowed abroad. This is because according to RBI, this will put banks under unnecessary exposure to dollar and will further add to their existing pool of problems. 

Things to work out in long term

    • Technology upgradation: Digitalization is the buzz word for businesses and banking, especially PSBs should adapt to the concept of digital to make banking operating seamless. Technology will make or break the way people look at services in the coming time, so banks should ride the bus before it leaves the stop. From adding top-notch technology to upgrade services to upgrading existing set-up, a lot of opportunities lies in technology and harnessing the same will help bringing in a big change in approaches. 
    • Technology reach: Tech inclusion and tech literacy campaigns should be undertaken to ensure that paperless banking or basic tech services are so easy to use that it is available/accessible and usable to all. This is not undoable. If people can order products on Amazon, use Facebook, why not banking services. Of course, with appropriate security measures in place. 

 

  • Focus on MSMEs: Banks, including PSUs are primarily keeping their attention on retail advances or corporates today. The banking sector mostly chooses to ignore the MSME advances. This trend is not healthy for the economy and will not help banks grow in the days to follow. MSMEs are the backbone of Indian economy and creates employment for 70 million people. This sector has a 16% contribution to the Indian GDP, which as per reports is to become 25% by 2022. Certainly, the prosperity and growth of this sector will help leverage the economy and give it a prosperous enrichment. 

 

  • Customer-centric Innovation: Innovation is key to customer loyalty in today’s day and age and in order to win customer loyalty in long term, banks should focus more on innovation. Keeping pace with the changing environment and other industry practices the banking sector should invest in innovation that will help them serve their customers with ease. The more agile the services and banking practices, the easier it will be for the customer to bank with the partner. 

The pandemic has been an eye opener for everyone in some way or other. However, counting in the positives of the pandemic there is a chance to relook at the economy. This is the right time to repair and reorient as we prepare for a better tomorrow. 

(Brajesh Kumar Tiwari is the Author of “Changing Scenario of Indian Banking Industry” Book; Associate Professor Atal Bihari Vajpayee School of Management & Entrepreneurship (ABV-SME); Member (Innovation Council, JNU); Jawaharlal Nehru University (JNU). Views expressed are the author’s own.)

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Know how Banks and Financials performed throughout this week, BFSI News, ET BFSI

Personal Finance

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Benchmark indices have been on a record-breaking rally lately and August witnessed the stock market reaching many new highs. The BSE benchmark soared over 9% last month. Buying action continues to follow a positive global trend. The index has formed a strong bullish candle on weekly charts.

Major market driving factors for this week are considered to be the Improving general pandemic conditions, GDP numbers indicating revival in economic activity, increased confidence in facing a potential third wave, the stress on universal vaccination and the indications from Jackson Hole address.

Monday Closing bell: All time high
Nifty made a strong bullish bar on Monday (30 August, 2021) closing at its all time high level. The rally was also supported by Banknifty. Nifty closed at 16,931 up by 225 points. Banknifty closed at 36,347 up by 720 points.

Tuesday Closing bell: All time high
Another All time high Nifty made another lifetime high on Tuesday. It had been showing strength since the last four trading sessions. The Sensex closed at 57,552.39, up 662.63 points, or 1.16%, while Nifty was at 17,132.20, up 201.15 points, or 1.19%. Metals, IT financials were top gainers.

Wednesday Closing bell : Markets end in Red
The Indian benchmark indices ended in the red after hitting record highs in the early trade on September 1. At close, the Sensex was down 0.37%, at 57,338.21, and the Nifty was down 0.33%, at 17,076.30.

However, Axis Bank and Induslnd Bank were among top BSE Sensex gainers. Bank Nifty gained 0.4% to settle at 36,574. Nifty sectoral indices mostly ended in green, except for Nifty Financial Services.

Thursday Closing bell: Markets end Flat
Benchmark indices ended higher with Nifty closing above 17200 led by IT and FMCG stocks. At close, the Sensex was up by 0.90% at 57852.54, and the Nifty was up 0.92% at 17234.20. Except for auto and PSU Bank, all other sectoral indices ended in the green with IT and Pharma indices up 1% each. HDFC Life was amonth the top Nifty gainers. BSE midcap and smallcap indices gained over 0.5% each.

Friday Closing Bell: Fresh record
The Sensex closed at 58,129.95, up by 0.48%, while the Nifty was at 17,323.60, up 0.52%. Boosted by Reliance Industries and a jump in Exide Industries following the sale of the battery maker’s insurance unit Exide Life Insurance to HDFC Life Insurance, while the focus was also on a key US jobs report later in the day.

Among sectoral indices on the NSE, Nifty Bank fell the most – down nearly by 1.5% to 23,531 levels. HDFC Bank, Induslnd Bank, HDFC Life were among the top losers.

Industry Key Takeaways

India’s GDP rose 20% in the June quarter

India’s economy expanded at its fastest ever in the June quarter, helped by the low base of the year-earlier record contraction and a strong rebound in manufacturing and construction, data released on Tuesday showed. The data also reflected thag Fiscal deficit narrowed to a nine-year low of 21.3% of annual budget estimate as of July end at Rs 3.21 lakh crore, helped by a rise in revenues and decline in non-interest revenue expenditure.

Kotak Mahindra Bank to sell 20 crore shares of Airtel Payments Bank to Bharti Enterprises:

Kotak Mahindra Bank on August 31 said it will sell 20 crore shares held in Airtel Payments Bank (APBL) for a cash consideration of Rs 294 crore or more to Bharti Enterprises Ltd. A share purchase agreement was executed by the bank for divestment of 20,00,00,000 equity shares (8.57 percent stake) held by Kotak Mahindra Bank Ltd in APBL.

ICICI Bank hits Rs 5 lakh crore market cap; what should investors do?

On September 1, Private sector lender ICICI Bank crossed Rs 5 lakh crore in market capitalisation for the first time only to become the second bank to attain the said feat. Among banks, HDFC Bank, the country’s largest lender by assets, remained at the top with Rs 8.7 lakh crore market capitalisation, while SBI is at the third spot with Rs 3.81 lakh crore market cap, Kotak Mahindra Bank at 4th and Axis Bank at 5th.

HDFC Life Insurance share price hits 52-week high

HDFC Life Insurance Company share price touched 52-week high of Rs 775.65and rising percent intraday on September 2 as company board is going to consider fundraising on September 3.

“A meeting of the board of directors of HDFC Life Insurance Company is proposed to be held on Friday, September 3, 2021 to consider issue of equity shares and / or other securities of the company by way of preferential allotment,” company said in its release.

HDFC Life to acquire 100% stake in Exide Life Insurance:

HDFC Life Insurance on Friday announced that its board has approved acquisition of 100% of the share capital of Exide Life Insurance Company Ltd for a total consideration of Rs 6,687 crore. Exide Life will be subsequently merged into HDFC Life.

HLIC also announced that out of the aggregate amount, Rs 725 crore will be settled in cash and the balance via issuance of over 8.70 crore equity shares at an issue price of Rs 685 per share to Exide Industries Ltd.



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Bank stocks gain over 2% as Nifty crosses 16,900, BFSI News, ET BFSI

Personal Finance

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Indian benchmark indices started the week on a positive note, hitting fresh record highs of 16,931. Traders took encouragement as foreign direct investment (FDI) into the country rises. Asian shares perked up and the dollar fell to a two-week low, today after the US Federal Reserve chairman’s speech.

Benchmark indices gained over 1% and closed at fresh record highs amid positive global cues. At close, the Sensex was up 1.36% at 56,889 and the Nifty was up 1.35% at 16,931.

The Nifty Bank Index ended 2.02% at 36,347. Amongst the top gainers were Axis Bank at Rs 784 adding 4.21% followed by RBL Bank at Rs 169 (4.02%), Bandhan Bank at Rs 285 (3.55%), SBI at Rs 422 (2.49%), ICICI Bank at Rs 713 (1.99%), PNB at Rs 36 (1.66%). All major indices ended in the green.

Nifty Financial Services ended higher at 17,843 adding over 1.85%. Amongst the biggest gainers were Chola Invest. at Rs 548 adding 4.46% followed by Indiabulls Hsg at Rs 227 (3.61%), Bajaj Finance at Rs 7,165 (2.86%), Power Finance at Rs 129 (2.77%), Bajaj Finserv at Rs 16,560 (2.25%).

Buzzing stocks

Axis Bank share price gained over 2% as the private lender began issuing debt securities under a Rs 35,000-crore debt raise plan.

The bank said on August 30 it started issuing securities under the debt-raise plan announced earlier this year. The private sector lender’s board had in April approved a capital-raise proposal of up to Rs 35,000 crore by issuing various debt instruments in Indian or foreign currency in domestic/overseas markets in one or more tranches.

Other key takeaways

Q1FY22 GDP prints likely to be released on August 31

India’s April-June quarter (Q1) GDP numbers are likely to show a significant surge owing to the lower base of last year’s first quarter and a rebound in consumer spending post the second wave of COVID-19.

Experts believe that even though May had seen a slowdown due to the lockdowns, there was a sharp recovery in June and that the economic impact of the second wave has been much more muted than the first wave . According to a Reuters poll, the country’s Q1FY22 GDP growth might have touched a new record.

SBI research report Ecowrap suggests that the country’s Q1FY22 GDP is expected to grow at around 18.5 per cent. However, it is lower than the Reserve Bank of India’s GDP growth projection of 21.4 per cent for the June quarter.

Bank of India extends term of P R Rajaqopal as executive director

The company has extended the term of office P R Rajagopal, Execurive Director of Bank for a period of two years beyond his currently notified term which expires on 28.02.2022, or until further orders, whichever is earlier. Bank of India shares rose 0.97% to Rs 68.00.

FPIs net buyers invest Rs 986 cr in equities in August

Foreign portfolio investors (FPIs) pumped in a net of just Rs 986 crore in Indian equities during August, as cautiousness continued to persist among overseas investors.

According to data from depositories, FPIs bought equities worth Rs 986 crore and invested Rs 13,494 crore in the debt segment during August 2-27. This translated into a total net investment of Rs 14,480 crore.

Gold prices continue to shine

Gold prices rose from a low of USD 1,785.20 on Friday and continued their upward trend on Monday, reaching a high of USD 1826.3 in the early morning session. Gold prices are expected to rise due to a drop in the dollar index and Fed Chair Powell’s dovish tone.

Gold prices are likely to continue solid when trading above the 20-day EMA’s important support level of USD 1797.56, but they may confront significant resistance between USD 1834- USD 1850.

Dollar hit a fresh two-week low

In overnight trade on Wall Street, US stocks surged as US Treasury yields fell on Friday after Federal Reserve Chair Jerome Powell indicated the US central bank could begin scaling back its bond buying programme by year-end but did not give a firm timeline. The Dow Jones Industrial Average rose 0.69%, the S&P500 index gained 0.88% and the Nasdaq Composite added 1.23%.

Held back by the message from the US Federal Reserve chief that there is no hurry to dial back massive stimulus, the dollar hit a fresh two-week low at 92.595 before steadying around 92.66, still a touch lower on Monday.



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Key metrics bank depositors should track now

Personal Finance

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Not only did the pandemic raise the business risks of banks but it also added more terms to the jargon used to express the financial conditions of banks. Depositors trying to gauge the non-performing assets (NPA) of a lender had to also keep an eye on collection efficiency and proforma NPAs. This stemmed from the Supreme Court’s stay on recognising bad loans until the legality of the loan moratorium’s extension was finalised. Thankfully, the apex court cleared the air through its ruling on March 23. While banks will now revert to the old format of reporting GNPAs or gross Stage 3 assets (Ind AS) in the upcoming quarters, the ruling can have immediate implications on the financials of banks, particularly for the quarter ended March 31, 2021. Depositors will now need to see the strength of the following financial metrics before boiling down on the investment decision.

Bad loans and provisioning

With the Supreme Court having imposed a standstill, the official NPA numbers reported by banks, up till the recent December quarter, didn’t reveal the accurate picture of bad loans. Hence, most lenders disclosed individual proforma NPA. This figure showed what the NPA situation would have looked like if a bank had continued to recognise bad loans without applying the court concessions.

Take a look at the December quarter financials of RBL Bank. The bank reported a drop in GNPA to 1.84 per cent from 3.33 per cent in corresponding quarter last year. However, the bank also disclosed that about 2.62 per cent of the loan book, which was also under moratorium, could have slipped into bad loans during the quarter. Put together, the bank’s proforma NPAs stood at 4.57 per cent in the December 2020 quarter.

Now with the SC having passed the judgement, new terms such as collection efficiency and proforma NPA number will be a thing of the past and banks will express these numbers under the GNPA figure. Banks might hence be required to bump up their provisions accordingly. In the upcoming results, depositors need to be cautious about any sudden NPA spike reported by banks.

That said, the situation is not alarming for all banks for two main reasons. One, many banks have carefully extrapolated the likely slippages on the moratorium book and have adequately provided for it in the first nine months of FY21. In the above mentioned example, RBL Bank has provided for 70.7 per cent of its proforma GNPAs as of December 2020.

Two, many defaulting borrowers may repay the loans before the end of March 31, 2021, fearing downgrade in their credit rating (with the SC ruling having cleared the air around this).

Besides, the higher incidence of defaults, particularly in retail loans could have been on account of the cash crunch led by job losses and pay cuts. It is expected that the RBI measures to improve systemic liquidity could have led to improving collection efficiencies of banks. Another likely succour comes from the legal recourse now available for banks ( SARFAESI Act can now be invoked post the SC ruling).

Capital adequacy

Not only will the surge in provisioning costs dent the profits of the bank, but it might also lead to a heavy charge on the bank’s capital. Banks are required to report Capital Adequacy Ratio (CRAR), which shows the bank’s capital as a ratio to its risk-weighted assets (higher bad loans imply higher risk adjustment). The CRAR describes the bank’s ability to absorb losses without diluting capital, and hence its ability to lend further.

As of December 2020, Kotak Mahindra Bank and Bandhan Bank reported healthy CRAR ratios of over 21 per cent, leaving them with ample room to absorb any shock and maintain growth at a steady rate. Other leading private banks such as HDFC Bank, Axis Bank and ICICI Bank have CRAR in the range of 18-19 per cent.

As per the regulatory requirement, a bank has to maintain a minimum CRAR of 9 per cent, failing which it can be subject to strict actions from RBI, such as curbs on business operations, branch expansion, etc. In extreme cases the RBI may even put the bank under PCA (Prompt Corrective Action).

The RBI in its financial stability report had estimated that about 3 to 5 banks (varying from baseline to severe stress case scenarios) may fail to meet the minimum capital requirements by end of March 2021 out of the 53 scheduled commercial banks.

A few banks have been raising capital to make good the anticipated deficit. For instance, Bank of Baroda, that reported a CRAR of 12.93 per cent as at the end of the third quarter of FY21, has raised capital through the QIP route to the tune of ₹4,500 crore in the first week of March.

Depositors need to be wary of banks that have not prepared themselves of such steep decline in their capital adequacy ratio in the coming quarters.

Margins

Higher NPAs have a two-fold effect on profits; on one hand while additional provisioning can dent profits, interest reversals for loan accounts that have now turned bad, on the other hand, impacts interest income. This can dent their net interest margins.

Besides, the SC ruling on compound interest during moratorium warrants more interest reversals on part of banks. As per the judgement, banks cannot charge any interest on interest (compound interest) during the moratorium period and any amount so collected must be refunded or adjusted from subsequent instalments due. While the Centre had already relieved small borrowers (those with outstanding loans of up to Rs 2 crore) of such compound interest, banks have now requested the Centre to foot the bill for the remaining borrowers as well. This is a bid to avoid a dent their bottom-line.

However, the effect of these interest reversals can likely be set off with good credit growth in the March quarter. According to consolidated bank data from RBI, the scheduled commercial banks reported a credit growth of 6.5 per cent (yoy) in February 2021. While this is lower than 7.3 per cent in February 2020, credit in the country is gradually improving from the lows of 5.8 per cent witnessed in September 2020.

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Nifty and Sensex end flat amidst volatile trade; financials outperform, BFSI News, ET BFSI

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At close, the Sensex was up 12.78 points or 0.02% at 51,544.30, and the Nifty was down 10 points or 0.07% at 15,163.30. Nifty Bank index added 1% ending at 36,108 while BSE Bankex closed at 40,835 adding 0.99%.

Amongst the top Gainers were- ICICI Bank at Rs 647 adding 2.69 % followed by Bank of Baroda at Rs 78 (1.49%), Bandhan Bank at Rs 337 (1.46%), Axis Bank at Rs 750 (1.39%), SBI at Rs 393 (0.77%), HDFC Bank at Rs 1,581 (0.61%). Major Indices that traded in the red were RBL Bank at Rs 241 (-0.96%), IDFC First Bank at Rs 52 (-0.86%), Kotak Mahindra at Rs 1,951 (-0.51%).

Nifty Financial Services ended at 17,061 adding 0.92%. Amongst the biggest gainers were Indiabulls Hsg at Rs 236 (1.98%) followed by HDFC at Rs 2,791 (1.12%), Bajaj Finserv at Rs 10,278 (0.61%), Bajaj Finance at Rs 5,577 (0.19%). Other major indices that traded in Red were Power Finance at Rs 126 (-0.82%) and Cholamandalam at Rs 468 (-0.65%).

Other key takeaways

India Ratings on GDP growth:
India Ratings and Research estimates the gross domestic product (GDP) growth will bounce back to 10.4% YoY in FY22, primarily driven by the base effect. The estimate also shows that after recording negative growth during 9MFY21, GDP growth will finally turn positive at 0.3% YoY in Q4 FY21.

Although the recovery in FY22 on a YoY basis is expected to be V-shaped, the size of the GDP will barely surpass the level attained in FY20 and will be 10.6% lower than the trend value. The impact of COVID-19 pandemic and lockdown on the economy, although subsiding, will continue to delay the normalisation of economic activities

Gold Updates
International gold and silver prices ended lower on February 11 as the dollar halted its slide. Domestic gold and silver prices ended in the red, tracking weak overseas prices. Gold’s inability to trade back over $1,850, and for silver, the level is $28 has triggered profit-taking in both metals.

Technically, MCX April gold was unable to cross 48,000 and now has reached a support zone near 47,500. Below the level, a downside pressure can be seen up to 47,200-47,000. Resistance is at 47,700-47,950 levels.

MCX March silver holds resistance at 69,000, indicating a sideways to marginal downside momentum up to 68,050-66,200 levels. Resistance is at 69,000-70,500 levels.

Rupee Updates
Indian rupee ended 11 paise higher at 72.75 per dollar, amid volatile trade witnessed in the domestic equity market. It opened higher at 72.81 per dollar against previous close of 72.86 and traded in the range of 72.73-72.83.

S&P 500, Nasdaq Close at Records
The S&P 500 shook off earlier declines to narrowly eke out a record closing high. The Dow ended a tick below its recent record closing level. The Nasdaq advanced to a record high of its own as tech shares outperformed, gaining 0.4% by market close.

Major stock indexes opened modestly higher but gave up those gains by midday and traded lower for most of the afternoon. A flurry of buying activity helped the S&P 500 and Nasdaq bounce back from their lows in the final minutes of trading.

London stocks falls
London’s main stock indexes fell on Friday, as data showed the UK economy shrank by a record 9.9% last year due to nationwide shutdowns that were imposed to curb the spread of COVID-19.

Official figures released on Friday, showed gross domestic product (GDP) grew 1.0% between October and December, at the top end of the range of forecasts by economists in a Reuters poll.



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