Indian stocks hit single-week low as shadow lenders drop over fears of tougher rules

BENGALURU (Reuters) – Indian stocks ended Monday at a low of more than a week, weighed down by non-bank financial companies (NBFC) on fears of a possible tightening of rules for the sector, although the gains of heavy goods vehicles HDFC Bank and Reliance Industries were capped losses.

The blue chip NSE Nifty 50 index fell 1.06% to close at 14,281.3, while the benchmark S&P BSE Sensex fell 0.96% to 48,564.27. Both indices hit their lowest closing level since January 7.

The Reserve Bank of India (RBI) is expected to come up with proposals this week in which it could recommend that the largest shadow banks maintain a statutory liquidity ratio and a cash reserve ratio, which could constitute a huge loss of liquidity for the government. sector, Reuters reported on Saturday. .

“Such strict regulation, if implemented at a time of very weak economic growth, could severely restrict the ability of NBFCs to lend and further undermine growth,” Macquarie Suresh Ganapathy analyst said in a statement. note to customers.

The RBI tried to tighten regulatory standards for the industry after India’s largest shadow lender IL&FS collapsed in 2018, as the industry also recovers from a coronavirus downturn.

Shares of the country’s largest mortgage lender, HDFC, fell 2.5%, while Bajaj Finance and Bajaj Finserv fell more than 3%.

The Nifty Metal Index was the worst performing index, falling 4.1% to its lowest level since January 4.

HDFC Bank finished up 1.1% to a record closing high, after the leading private sector lender on Saturday reported strong profit and loan growth for the December quarter.

India’s top-valued company, Reliance Industries, rose 2.4%. The conglomerate plans to integrate its e-commerce app JioMart into WhatsApp within six months, the financial daily Mint reported.

Dewan Housing Finance Corp rose 5% after the company’s creditors voted for a 372.5 billion rupees ($ 5.09 billion) takeover bid by the Piramal Group for the troubled shadow lender .