Sensex, Nifty extend opening losses in early deals

Indian equity benchmarks made negative start on Friday amid weak global cues, as investors await critical US payroll data scheduled to be released later today. This data will be significant as it could decide whether a rate cut expected this month will be regular or super-sized. Sensex and Nifty soon extend their losses and are trading lower with cut of over half a percent each in early deals as investors are eyeing bank loan growth, deposit growth, and foreign exchange reserve data. Market particpants also remained on sidelines ahead of the Goods and Services Tax (GST) Council meeting scheduled to hold on September 09, where members could likely decide on four options regarding tax treatment of health insurance. The cost to the exchequer could potentially range from nearly Rs 650 crore to Rs 3,500 crore. Foreign fund outflows also dented sentiments. As per NSE data, Foreign Institutional Investors (FII) were net sellers of Indian equities worth Rs 688.69 crore on September 05. 

On the global front, Asian markets are trading mixed, following the mixed cues from Wall Street overnight, as traders cautiously await the closely watched monthly US jobs report later in the day for further cues on the outlook for interest rates. Lingering concerns about the outlook for growth in the world's largest economy is weighing on market sentiment. Meanwhile, the average of household spending in Japan slipped a seasonally adjusted 1.7 percent on month in July, the Ministry of Internal Affairs and Communications said - coming in at 290,931 yen. Moreover, trading activities at the Hong Kong Exchanges cancelled due to Super Typhoon Yagi.

Back home, metal stocks are in focus after Union Commerce and Industry Minister Piyush Goyal mooted the idea of introducing a border adjustment tax (BAT) and suggested discussions on this with the steel industry to safeguard the interests of domestic players. The idea assumes significance as the industry is seeking protection from imports at predatory prices. In stock specific development, Pidilite Industries rose after it sealed exclusive distribution agreement with CollTech Group.

The BSE Sensex is currently trading at 81704.55, down by 496.61 points or 0.60% after trading in a range of 81658.64 and 82254.79. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index fell 0.44%, while Small cap index was up by 0.12%.

The only gaining sectoral indices on the BSE were Realty up by 0.20% and Healthcare up by 0.06%, while Telecom down by 2.07%, PSU down by 1.26%, Energy down by 1.12%, Oil & Gas down by 1.12% and Capital Goods down by 0.73% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finance up by 1.58%, Bajaj Finserv up by 0.71%, Hindustan Unilever up by 0.27%, Asian Paints up by 0.20% and Titan Co up by 0.18%. On the flip side, SBI down by 1.67%, HCL Technologies down by 1.27%, Ultratech Cement down by 1.25%, Reliance Industries down by 1.18% and NTPC down by 1.09% were the top losers.

Meanwhile, Boston Consulting Group (BCG) in association with FICCI and the Indian Banks’ Association (IBA) in latest report titled ‘Banking for a Viksit Bharat’ has said that a 20-fold increase in the financial services sector is needed for India’s goal to achieve a $30 trillion Gross Domestic Product (GDP) by 2047. The report estimates that banks will need a capital base of $4 trillion, with one-third of this needing to be fresh capital deployment. Despite the robust current state of India’s banking system - characterized by high profitability, strong capital adequacy, and low non-performing assets (NPAs) - the sector faces challenges and opportunities to sustain its growth and support national economic ambitions.

There is a shift from physical to financial assets and informal to formal borrowing channels. Despite this, financial assets and borrowings remain under-penetrated, presenting significant growth opportunities. Banks need to innovate deposit products and enhance customer awareness. The growth in retail lending, particularly unsecured lending, has driven financial inclusion but presents challenges. With a large population outside the formal workforce, banks must reimagine operating models and underwriting capabilities to better serve this segment.

Rising costs and slow income growth necessitate a bold reimagining of the operating model. Banks need to address the ‘sticky’ legacy cost structure and increase IT investments to enhance productivity. Despite high rankings in digital maturity, Indian banks need continued investment to bridge gaps in digital opportunities, especially in product fulfilment and money insights. The sector must embrace next-generation technologies and tackle increasing cyber risks. A shift in operating models is necessary to address climate risk and leverage a $2.5 trillion financing opportunity.

The CNX Nifty is currently trading at 24991.15, down by 153.95 points or 0.61% after trading in a range of 24968.95 and 25168.75. There were 10 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were Bajaj Finance up by 1.50%, LTIMindtree up by 1.50%, Bajaj Finserv up by 0.61%, Britannia Inds up by 0.37% and Hindustan Unilever up by 0.20%. On the flip side, SBI down by 2.06%, Coal India down by 1.69%, HCL Technologies down by 1.52%, Ultratech Cement down by 1.30% and ONGC down by 1.17% were the top losers.

Asian markets are trading mixed; Taiwan Weighted jumped 205.15 points or 0.96% to 21,392.86, Jakarta Composite rose 45.95 points or 0.59% to 7,726.99 and Straits Times added 6.23 points or 0.18% to 3,464.89. On the other hand, Nikkei 225 slipped 203.18 points or 0.56% to 36,453.91, KOSPI dropped 22.74 points or 0.89% to 2,552.76 and Shanghai Composite was down by 6.31 points or 0.23% to 2,782.00.