Post Session: Quick Review

Indian equity markets lost more ground on last trading day of week with Nifty and Sensex settling below the psychological 24,900 and 81,200 levels respectively. Markets traded with massive losses throughout the day. Weakness in global markets forced Indian markets to trade lower. Globally investors were cautious ahead of a key U.S. jobs report that could influence the magnitude and pace of the Federal Reserve's interest rate cuts. There were no gaining sectoral indices on the BSE. As for broader indices, the BSE Mid cap index and Small cap index also ended with losses. 

Markets made gap down opening and extended their losses amid weak global cues. Some cautiousness also came 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. Traders took a note of Union Minister of Commerce & Industry, Piyush Goyal’s statement that a genuine rational single window is key for ease of doing business in the country. He said that if all States and Union Territories (UTs) come to one platform for approvals and facilities, it would attract global investment in each state. In afternoon session, markets continued to trade under pressure. Traders were worried as Minister of Road Transport and Highways Nitin Gadkari said that India, an oil guzzler with a massive fossil fuel market, will find it difficult to cut crude imports by 25 per cent. India imported 87.7 per cent of its crude oil in 2023-24. Markets continue to linger under pressure in the late afternoon session, as traders preferred to remain on sidelines ahead of US job data.

On the global front, European markets were trading lower as growth worries persist ahead of key Eurozone and U.S. economic data due later in the day. Industrial production and foreign trade data from Germany along with U.K. house price data may influence investor sentiment as the day progresses. Asian markets ended mostly in red as Japan’s household spending data for July rose 0.1% in real terms from the previous year, compared to a 1.2% rise expected from street, and a reversal compared to a 1.4% fall in June. Back home, 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 BSE Sensex ended at 81,183.93, down by 1017.23 points or 1.24% after trading in a range of 80,981.93 and 82,254.79. There were 4 stocks advancing against 26 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index declined 1.41%, while Small cap index was down by 0.96%. (Provisional)

The top losing sectoral indices on the BSE were Telecom down by 3.23%, PSU down by 2.48%, Oil & Gas down by 2.19%, Energy down by 2.09% and Bankex was down by 1.93%, while there were no gaining sectoral indices on the BSE. (Provisional)

The top gainers on the Sensex were Bajaj Finance up by 1.22%, Asian Paints up by 1.13%, JSW Steel up by 0.79% and Hindustan Unilever up by 0.08%. On the flip side, SBI down by 4.40%, ICICI Bank down by 2.09%, NTPC down by 2.08%, HCL Tech down by 1.95% and Reliance Industries down by 1.92% were the top losers. (Provisional)

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 ended at 24,852.15, down by 292.95 points or 1.17% after trading in a range of 24,801.30 and 25,168.75. There were 7 stocks advancing against 43 stocks declining on the index. (Provisional)

The top gainers on Nifty were Asian Paints up by 1.09%, Bajaj Finance up by 1.00%, JSW Steel up by 0.79%, Divi's Lab up by 0.33% and LTIMindtree up by 0.26%. On the flip side, SBI down by 4.43%, BPCL down by 2.37%, ICICI Bank down by 2.25%, NTPC down by 2.10% and HCL Tech down by 1.92% were the top losers. (Provisional)

European markets were trading lower; UK’s FTSE 100 decreased 30.93 points or 0.38% to 8,210.78, France’s CAC fell 14.35 points or 0.19% to 7,417.61 and Germany’s DAX was down by 83.01 points or 0.45% to 18,493.49. 

Asian markets ended mostly down on Friday ahead of key US jobs data later in the day, that could influence the pace and magnitude of rate cuts by the US Federal Reserve. Chinese shares declined after Zou Lan, head of Chinese central bank's monetary policy department, said there is room to lower the amount of cash banks must hold as reserves while it faces some constraints in cutting interest rates. Japanese shares fell as a stronger yen weighed on exporters, while data showed Japanese household spending rose less than expected in July. Meanwhile, Hong Kong's share market trading was cancelled due to a typhoon alert.