Dear Trader…
Indian equity benchmarks ended the sluggish day of trade with losses of around one and half percent on Tuesday, following weakness in global peers and amid rising geopolitical tensions in Europe. Markets started the session on pessimistic note and gradually drifted lower as the session progressed amid subdued foreign flows. Foreign institutional investors (FIIs) turned net sellers to the tune of Rs 2,139.02 crore on October 10, as per provisional data available on the NSE.
Traders remained cautious with a private report that India's retail inflation accelerated to a five month high of 7.30% in September due to surging food prices, staying well above the Reserve Bank of India's (RBI) upper tolerance band for a ninth month. Sentiments also weighed on by a private report stating that a number of rating agencies, domestic banks, and groups have pared the forecast for India’s economic growth.
Nifty futures opened at 17220.00 points against the previous close of 17227.45 and opened at a low of 16951.00 points. Nifty Future closed with an average movement of 288.00 points and a decline of around 266.80 points and 16960.65 points...!!
On the NSE, the midcap 100 index will decline 1.74% and smallcap 100 index is closing decline 1.70%. Speaking of various sectoral indices, Realty, Metal, Media, IT, Consumer Durables and FMCG stocks saw heavy selling on the NSE, while all other sectoral indices also closed lower.
At the start of intra-day trading, October gold opened at Rs.50915, fell from a high of Rs.50989 points to a low of Rs.50710 with a decline of 126 points, a trend of around Rs.50897 and December Silver opened at Rs.58800, fell from a high of Rs.58800 points to a low of Rs.58019, with a decline of 641 points, a trend of around Rs.58461.
Meanwhile, in order to improve ratings disclosures on bank credit to large customers, the Reserve Bank of India (RBI) said unless rating agencies disclose names of all lenders in their rating statements, banks cannot use such ratings for capital computation for making provisions. Reviewing the prudential norms for risk weights for exposures to large corporates and non-banking finance companies, a notification from RBI (Reserve Bank of India) said the new mandatory loan rating disclosures will be effective from March 31, 2023.
Issuing the notification and setting the new deadline, the regulator said despite repeated reminders, external credit assessment institutions have not been making the mandated disclosures citing lack of consent from borrowers. As part of the master circular on Basel III capital regulations, issued on April 1, 2022, the monetary authority had asked rating agencies to disclose the name of all the banks in the credit rating statements after getting the consent from borrowers from August 31, 2021. But they have not been doing so citing their inability to secure the consent from borrowers.
Such disclosures make banks eligible to compute their capital requirement for such loans and make the needed capital provisions. Such disclosures will make bank eligible to derive risk weights for their unrated exposures based on the ratings available for a specific rated debt, provided the bank's facility ranks pari passu or senior to the specific rated debt in all respects and the maturity of the unassessed claim is not later than the maturity of the rated claim.
Technically, the important key resistances are placed in Nifty future are at 17007 levels, which could offer for the market on the higher side. Sustainability above this zone would signal opens the door for a directional up move with immediate resistances seen at 17077 – 17107 levels. Immediate support is placed at 16808 – 16737 levels.
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