RBI’s Latest Move Puts Pressure on Financials in India

At the close, the Nifty 50 was at 19,731.80 down by 0.17%

The NSE Nifty 50 embarked on a downward trend, opening lower by 0.17% and concluding the session in negative territory. Despite a brief surge into positive territory early on, the day witnessed volatile trading, primarily influenced by the financial sector’s reaction to the Reserve Bank of India’s (RBI) revised norms concerning personal loans and credit cards.

The RBI’s decision to increase risk weights for unsecured loans impacted banking stocks, momentarily halting the recent upward trend in broader indices. Nonetheless, despite this temporary setback, a fundamental positive sentiment prevails, supported by the culmination of a strong earnings season, bolstering investor confidence.

The prevailing market inclination leans toward a strategy of ‘Buying during market declines,’ notably since the Nifty breached the critical threshold of 19,500. This strategy has gained traction in recent days, resonating well with the predominantly optimistic sentiment observed within the Nifty’s trading range.

Investor focus remains fixed on upcoming eurozone inflation data, anticipated to display a softening trend. Additionally, significant declines in oil prices and the stabilization of US yields contribute to maintaining market buoyancy in the short term, signaling underlying positive trends amid the recent fluctuations in the market.

Bank Nifty: Down by 1.31%

The financial markets experienced a downturn with both the Bank Nifty and BSE Sensex marking losses, declining by 1.31% and 0.28%, respectively. This decline was primarily driven by the central bank’s decision to heighten credit risk weights associated with unsecured consumer loans, necessitating increased capital requirements for banks and NBFCs offering such loans. The objective behind this policy change aimed to curb the swift expansion of unsecured consumer borrowings in the financial domain.

In sector-specific movements, the pharmaceutical sector showcased a notable 0.98% gain. Leading this surge, Aurobindo Pharma Ltd. demonstrated a robust 2.85% increase in their stock value, followed by Alkem Laboratories Ltd. with a commendable uptick of 2.03%.

In contrast, the Oil & Gas sector faced a decline of 1.11%, impacting major entities like Hindustan Petroleum Corporation Ltd. with a significant downturn of -3.22%, and Oil & Natural Gas Corporation Ltd. witnessing a decrease of -2.48% in their stock values.

Additionally, Foreign Institutional Investors/Foreign Portfolio Investors (FII/FPI) exhibited net selling activity, with a sale value of Rs. 12,035.41 crore against a buy value of Rs. 11,557.65 crore, resulting in a net negative value of Rs. 477.76 crore. Concurrently, Domestic Institutional Investors (DII) also engaged in net selling, with a sale value of Rs. 7,414.52 crore surpassing their buy value of Rs. 6,849.04 crore, leading to a net negative value of Rs. 565.48 crore. These activities reflect the collective sentiment of institutional investors impacting market movements.

Bank Nifty

The Nifty Banking sector had some gainers and some losers for the day.

The gainers included AU Bank with a 0.04% increase. On the other hand, the biggest losers in the sector included State Bank of India with a 3.72% decline, IDFC First Bank with a 3.56% decline, Axis Bank with a 3.28% decline, Bandhan Bank with a 2.27% decline, and Punjab National Bank with a 2.01% decline. These results suggest that some banking stocks not performed better for the day.

Buzz

Rupee Dips Marginally Against Dollar Amidst Global Trends

On Friday, the Indian rupee experienced a slight decline, sliding by 4 paise to settle at 83.27 against the US dollar. This dip was influenced by a sturdy US dollar in the international markets, coupled with setbacks in the domestic equity market, which collectively impacted investor sentiment.

However, the rupee managed to curtail its losses to some extent, courtesy of fresh Foreign Institutional Investor (FII) inflows and the stabilizing effect of crude oil prices hovering around four-month lows. These factors contributed to mitigating the downward pressure on the Indian currency.

Trading activities at the interbank foreign exchange market saw the rupee initiating at 83.23 against the US dollar, maintaining a relatively steady stance following the previous day’s dip in crude oil rates. Throughout the day’s trade, the rupee fluctuated within a narrow range of 83.23 to 83.28 against the dollar, showcasing limited volatility.

Ultimately, the rupee concluded the trading session at 83.27 against the dollar, marking a marginal decrease of 4 paise compared to its previous closing at 83.23 against the greenback the day before. This subtle fluctuation underscores the sensitivity of the rupee to global market dynamics and reinforces the significance of monitoring both international and domestic trends for a comprehensive understanding of currency movements.

Buzzing

SBI Life Insurance Company Ltd. exhibited a notable uptick, with its share price ascending by 3.95% to reach Rs 1,413.70, indicating a bullish trend with a 20-day moving crossover noted on November 15, 2023. Historically, this signal has led to an average gain of 3.13% within 7 days over the past 5 years. However, concerning its sales performance, the company witnessed a topline contraction, experiencing a 3.96% decline, marking its first revenue contraction in the last 3 years. Notably, the company maintains a commendable track record of zero debt for the past 5 years, instilling confidence in its financial stability. Additionally, intraday gains exceeding 5% were rare, occurring in only 0.66% of trading sessions over the last 6 years.

Conversely, State Bank of India saw a dip in its share price by -3.72% to Rs 562.90. Despite this, the bank showcased promising indicators such as declining Gross NPA% and Net NPA% over the past 4 years, reaching 2.78% and 0.67%, respectively. Moreover, the bank’s net profit per employee has steadily risen by 64.22% over the last 3 years, indicating positive financial growth. Its loan book growth, surpassing the 5-year CAGR at 16.96%, portrays a robust trajectory. Similar to SBI Life, intraday gains exceeding 5% were infrequent, occurring in only 1.69% of trading sessions over the last 19 years.

Advance Decline Ratio

Today, the advance-decline ratio was 1.05, and the market breadth was positive. The volatility index India Vix increased by 1.54 percent to settle at 11.83 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 1257
Decliners – 1199
52Wk High –  191
52Wk Low – 6
High Band Hitters – 154
Low Band Hitters – 44
200d SMA – 18709
50d SMA – 19589
20d SMA – 19337

Top Gainers and Losers Stocks

The top gainers were SBI Life (+3.95%), Apollo Hospitals (+2.74%), HDFC Life (+2.73%), Larsen & Toubro (+1.81%), and Tata Consumer (+1.52%).

The top losers were SBIN (-3.72%), Axis Bank (-3.28%), ONGC (-2.48%), BPCL (-2.07%), and Bajaj Finance (-1.91%).

Top Gainers and Losers Sector

The top gainers sector were Pharma (+0.98%), FMCG (+0.86%), Auto (+0.69%), Realty (+0.49%), Metal (+0.17%).

The top losers sector were Oil & Gas (-1.11%), Financial Services (-0.90%), IT (-0.25%), Consumer Durables (-0.03%).

SECTORS – NOTABLE ACTION
PHARMA +0.98%
FMCG +0.86%
AUTO +0.69%
OIL & GAS -1.11%
FINANCIAL SERVICES -0.90%
IT -0.25%

Stocks Ban List

(SEBI) F&O ban list (INDIACEM open at +220.30 and close at -217.95), (MANAPPURAM open at +160.00 and close at -154.95), (HINDCOPPER open at -159.00 and close at -157.90), (CHAMBLFERT open at +310.00 and close at -306.90), (MCX open at +2934.00 and close at -2871.35), (ZEEL open at +249.90 and close at -246.10), (DELTACORP open at -140.00 and close at -138.60), and (SAIL open at -88.40 and close at +89.30) are not currently on the stock exchange.

A stock enters the Ban List if its MWPL is above 95%. Implying that, Ban List shows the Futures and Options (FnO) stocks whose combined open interest in all FnO contracts for a given period crosses 95% of Market-Wide Position Limit.

NMDC, BHEL, HINDPETRO, PNB, GNFC, BIOCON, and TATACHEM stocks has the possibilities of enterance in the ban list.

SAIL stock has the possibilities of exit from ban list.

Daily Pivots

As per the above pivots data, 19640 to 19850 is the Nifty 50 trading range.

Read previous -Daily Insights- here
Market Continues Gains Despite Late-Day Selling
Nifty Soars Over 19,600 in a Remarkable Comeback
Diwali Festivities and Mutual Fund Investments Boost Market Sentiment

This article is only for educational purposes and is not an investment advice.