Latest news with #NBFCs
India Today
10 hours ago
- Business
- India Today
Sensex jumps over 700 points: Why is the stock market rising today?
Benchmark stock markets saw a significant surge on Friday, with the S&P BSE Sensex climbing 695.99 points to reach 82,060.16 by 11:15 am. The NSE Nifty50 also experienced a rise, gaining 215.75 points to stand at 25, rally was largely driven by strong performances in banking and financial stocks, following a regulatory change by the Reserve Bank of India (RBI).advertisementThe primary catalyst for this rally was the RBI's announcement concerning infrastructure financing. The central bank has implemented new norms that relax provisioning requirements for under-construction infrastructure projects. This adjustment reduces the amount of capital banks and NBFCs are required to set aside for potential loan defaults, thereby enabling them to extend more credit, especially in sectors like power, housing, roads, and railways. The market responded positively to the RBI's policy update, with infrastructure financiers witnessing substantial gains. Shares of companies like Power Finance Corporation, REC, and IRFC saw strong intraday advances. Major contributors to the broader index gains included Jio Financial, Shriram Finance, Mahindra & Mahindra, and JSW Steel, with heavyweights such as Reliance Industries and State Bank of India also rising by 1-2%.Broader market sentiment was upbeat, although there has been volatility in recent sessions concerning small and mid-cap stocks. Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted the potential for the Nifty to remain range-bound between 24,500 and 25,000 in the near term. He said, "The upper side of the range will be broken only on news of de-escalation in the Israel-Iran conflict or an abrupt end to the war. There is uncertainty on this front."advertisementDespite the positive market conditions, Vijayakumar also highlighted concerns about the broader market. He pointed out that while the Nifty remains stable, small and mid-cap stocks have corrected sharply, with some seeing declines of up to 2%."This trend may persist as excessive valuations and risk-off sentiment continue to weigh on SMIDs," he remarked. Investors might consider redirecting their capital into more stable, fairly valued large-cap stocks across various sectors such as financials, industrials, autos, and real policy from the RBI is creating a favourable environment for markets, yet global uncertainties and sector-specific valuation concerns still loom over the market's future trajectory. Investors remain cautious, watching for developments that could impact market domestic institutional buying on market dips provides some cushion, geopolitical tensions and crude oil price fluctuations remain potential threats. For instance, if crude oil prices exceed $85 per barrel, the market's lower range could be tested. As Dr. Vijayakumar notes, the market's path forward is contingent on these today's market rally reflects a positive response to regulatory changes, but persistent global uncertainties suggest that further market shifts will heavily depend on external developments and ongoing valuation assessments. The optimism around infrastructure lending is a significant driver, but vigilance is necessary as the global landscape continues to In
Time of India
11 hours ago
- Business
- Time of India
Mayuresh Joshi on 3 sectors where earnings & valuation support can take stock prices higher
Mayuresh Joshi , Head Equity, Marketsmith India, says healthcare, particularly hospitals adopting asset-light models, shows earning stability with improved occupancy and revenue per bed. Select NBFCs with strong financials are poised for growth amid falling interest rates. Consumption-driven stocks like Vishal Mega Mart and V-Mart Retail could benefit from rebounding rural spending, exhibiting potential for volume and price gains. What are you making of this very range-bound trade that we have been stuck in for a while now? At the same time, once again, it is the broader markets wherein we are seeing movement and today unfortunately it is quite down. Where will the largecaps find the next set of triggers from? Mayuresh Joshi: The markets are reacting in terms of the geopolitics, specifically what's happening in West Asia. But there is some hope that if any news comes through in terms of de-escalation over the next few days, something which probably is assuming that the worst in terms of the conflict might be behind us, we will definitely come out of the range-bound trade that we are in. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Join new Free to Play WWII MMO War Thunder War Thunder Play Now Undo Obviously, within largecaps, the construct still remains positive in terms of select leadership BFSI stocks because the space generally looks geared up in terms of better earnings growth. Obviously, OMCs in the oil and gas space, become more of a tactical trade as we speak. But generally for largecaps, the mood has been pretty sanguine so far. It is the midcaps where the entire action might be over the next few quarters as earnings start coming back. So, midcaps and select leadership stocks might fare well where earnings are expected to hold up at least in a domestic context for the next few quarters. Within this lot of sector churning that is underway, which sector is poised for a good recovery? We just concluded the earning season as well. Is there any sector you will be watching closely for the next couple of quarters wherein earnings and valuation support can take the stock prices higher as well? Mayuresh Joshi: Healthcare as a space is where we believe stocks can do well selectively. Within healthcare, hospitals as a space has delivered a very decent set of numbers as far as Q4 is concerned and our take is that the asset light model that a lot of hospital stocks are embarking upon over the last few quarters has started yielding results both in terms of the average revenue per operating bed as occupancy rates are inching higher. We are probably seeing the average length of stay coming down as hospitals mature. And therefore, hospitals within healthcare as a space is where the earning stability might continue and a lot of hospitals are showing that earning strength specifically in their price strength as well as we see it in Marketsmith India. So, the ratings, rankings, institutional holding – all the elements that we follow, are getting exhibited in this space. Live Events You Might Also Like: How should you place your bets as Nifty makes a U-turn from 25,000? Vinay Rajani answers Certain hospital stocks like Kims, Fortis Healthcare , Narayana Hrudayalaya are where earning stability might continue over the next few quarters. The other space is obviously within BFSI where we have seen some strength in NBFC stocks. Our view is that select NBFC stocks might continue doing well. Therefore, in a falling interest rate scenario with the RBI frontloading 50 bps of rate cuts, the expectations is that in terms of stronger franchises with a better diversified borrowing mix, a better advanced mix, better capital adequacy and therefore a better take in terms of the overall balance sheet growth leading to better RoEs and ROAs, they can continue doing well. So, stocks like Shriram Finance are something we continue holding in our domestic and global portfolios. Last but not the least, a few of the consumption-driven stocks. With better monsoons, rural, semi-urban consumption which has started coming back should come back even more strongly in the second half and therefore for a few apparel makers Vishal Mega Mart, which just concluded a big block deal, V-Mart Retail, the same-store sales growth (SSG) has been pretty decent for these companies. It is a good mix for apparel, FMCG, and non-FMCG, the price points are appropriately placed and in tier II, tier III cities where the expectation is that if growth rebounds very strongly in terms of discretionary spending, these guys might benefit quite significantly on all parameters that we probably put through and therefore rating and rankings look superb. So, Vishal Mega Mart, V-Mart might be a couple of ideas on the semi-urban/rural discretionary spend which can exhibit better volume and price moves as far as balance sheets are concerned.
Times of Oman
11 hours ago
- Business
- Times of Oman
India's new gold loan regulations to reshape lending landscape: S&P Global
New Delhi: S&P Global Ratings anticipates that the new regulations in Gold-Backed Loans will necessitate business model adjustments for lenders, with nimble players likely to gain a competitive edge. India's booming gold-backed loan sector is poised for significant changes with the introduction of new regulations, expected to be fully implemented by April 1, 2026. A key change involves the inclusion of interest payments until maturity in the calculation of Loan-to-Value (LTV) ratios, which could reduce the initial loan amount disbursed to borrowers. Additionally, credit appraisals for consumption-focused loans exceeding USD 3,000 and all income-generating loans will now require a cash flow analysis of borrowers, a departure from the traditional reliance on collateral valuation. The new rules also aim to enhance customer protection by standardizing the regulatory framework and addressing prudential and conduct gaps. This includes clearer guidelines on collateral handling and auction processes, mandating the return of pledged collateral and auction surpluses to borrowers within seven working days. Disbursements above INR 20,000 (approximately USD 231) will now be made directly to borrowers' bank accounts. The RBI is also emphasizing greater transparency in interest rate and fee disclosures and scrutinizing the outsourcing of core financial services. This shift will particularly impact nonbank financial companies (NBFCs) with large gold loan portfolios, such as Muthoot Finance Ltd. and Manappuram Finance Ltd., as they will need to invest in developing new risk management policies and training loan officers. Despite these adjustments, operational agility and service excellence, including quick and seamless loan disbursement, will remain crucial differentiators for lenders. NBFCs' strong customer relationships and investments in analytics are expected to help them maintain competitiveness. While these new models offer opportunities, they also introduce risks, particularly the heightened sensitivity to sharp corrections in gold prices if higher LTV norms are adopted for income-producing loans. Gold prices have surged by nearly 80% since late 2023, leading to a significant increase in collateral value and loan books. The RBI's regulatory treatment of NBFC gold loans, which applies a 100% risk weight, helps mitigate price risk, although banks currently benefit from a 0% risk weight on these loans.
Time of India
12 hours ago
- Business
- Time of India
PFC, REC shares rally 4% as RBI eases provisioning norms for project financiers
Shares of project financiers PFC and REC jumped up to 4.5% on Friday after the RBI issued its final directions on project financing, replacing multiple legacy circulars and aligning norms across banks, NBFCs, and co-operative banks. PFC shares rallied as much as 4.5% to Rs 407.45, while REC rose 3.5% to a day's high of Rs 396.95. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Play War Thunder now for free War Thunder Play Now Undo "In comparison with the May 2024 draft proposal of 5% standard asset provisioning for under-construction projects, the 1.0%/1.25% provisioning for Infra/CRE projects under the final regulations provides a much-needed breather to project financiers, including REC and PFC," said Avinash Singh, analyst at Emkay Global . The guidelines, he noted, are positive for project finance lenders and remove the overhang caused by the May 2024 draft directions. "For power sector NBFCs (REC and PFC), even a minor impact of these directions, in the context of additional standard asset provisioning, will be absorbed through impairment reserves and exert no pressure on PAT or net worth. However, regulatory capital will see some impact—though minimal and likely only from FY27—as the guidelines apply only to loans achieving financial closure on or after October 1, 2025," Singh added. Live Events While the 2024 draft norms had proposed stringent provisioning (up to 5%) and stricter upgrade criteria (360-day performance requirement), the final guidelines have significantly relaxed these provisions, resulting in minimal impact on banks' profitability and balance sheets. Motilal Oswal also stated that the revised norms will have a negligible impact on bank and NBFC profitability, as the existing loan book remains unaffected. "The RBI's final project finance guidelines are a positive for banks and NBFCs, especially compared to the stricter 2024 draft. The most notable relief comes from significantly eased provisioning requirements—reduced to just 1% during construction (versus 5% proposed earlier) and as low as 0.4% post-DCCO. This reduces capital drag while maintaining prudence. Overall, the final norms strike a balanced approach, enabling continued flow of project finance with minimal impact on lenders' profitability or balance sheet strength," the brokerage said.
Times of Oman
12 hours ago
- Business
- Times of Oman
RBI issues final guidelines on project finance; new norms effective from October 1
New Delhi: The Reserve Bank of India (RBI) on Wednesday issued the final Reserve Bank of India (Project Finance) Directions, 2025 which lays down the comprehensive framework for income recognition, asset classification, and provisioning norms for project loans under implementation. As per the Central Bank, these new guidelines will come into effect from October 1 current year. The directions follow the RBI draft guidelines on 'Prudential Framework for Income Recognition, Asset Classification and Provisioning pertaining to Advances - Projects Under Implementation' on May 03, 2024, for stakeholder comments. The draft guidelines proposed an enabling framework for the regulated entities (REs) for financing project loans, while addressing the underlying risks. RBI said that it received feedback from nearly 70 entities, including banks, NBFCs, industry bodies, academicians, law firms, individuals, and the Central Government. According to new rules, the apex bank has introduced a principle-based regime for stress resolution in project finance exposures, applicable across all regulated entities (REs), ensuring a harmonised approach. The framework also rationalises the extension limits for the Date of Commencement of Commercial Operations (DCCO) to three years for infrastructure and two years for non-infrastructure projects, allowing REs commercial flexibility within these ceilings. On the provisioning front, standard asset provisioning for projects under construction has been fixed at 1%, increasing gradually with each quarter of DCCO deferment. "Rationalisation of standard asset provisioning requirement to 1 per cent for projects under construction, which shall gradually increase for each quarter of DCCO deferment. The requirements for under-construction CRE exposures will be however, slightly higher at 1.25 per cent," the RBI said in a notification. "During the operational phase, the standard asset provisioning requirement shall stand reduced to 1 per cent for CRE, 0.75 per cent for CRE-RH and 0.40 per cent for other project exposures, respectively," the RBI added. The new directions are aimed at balancing flexibility in project lending with adequate safeguards to manage risk, a long-standing demand from lenders and developers alike.
