Nifty, Sensex trade flat dragged by financial stocks

• The Nifty Bank is down a percent in trade after RBI tightened norms on personal loans late evening on Thursday.
• Axis Bank, SBI, Bajaj Finance, Bajaj Finserv, HDFC Bk and ICICI Bk are the biggest laggards.
• Asian Paints, Hindustan Unilever, Nestle, Mahindra & Mahindra are the major gainers.

Equity benchmark indices, the Nifty and the Sensex declined in early trade on Friday amid weak cues from the Asian markets and were later trading in huge volatile trends. The 30-share BSE Sensex declined 342.74 points to 65,639.74 after a weak beginning. The Nifty fell 97.75 points to 19,667.45. However, both the benchmark indices recovered and are trading flat at the time of publishing dragged by financial stocks.

The Nifty Bank is down a percent in trade after the Indian central bank, RBI, tightened norms on personal loans for banks and NBFCs late evening on Thursday. Analysts have said that three banks would be most impacted by the move as their capital ratios would be affected by 30-85 basis points.

A Nomura note says that the RBI’s action is a clear sign that the regulator wants to curb loan growth in these segments, and is a dampener for credit growth for the sector. "We estimate the impact on capital ratios for banks to be in the range of 25-80bp, with a sharper impact for PSUs like State Bank of India, where CET1 was lower to begin with."

Among the Sensex firms, Axis Bank, State Bank of India, Bajaj Finance, Bajaj Finserv, HDFC Bank and ICICI Bank were the biggest laggards.

Asian Paints, Hindustan Unilever, Nestle, Mahindra & Mahindra, Tata Motors and Titan were the major gainers.

Speaking about near-term trends, V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services believes, "there is a negative factor, the RBI action raising the risk weighting on unsecured loans is sentiment negative for financials."

In Asian markets, Seoul, Shanghai and Hong Kong were trading lower while Tokyo quoted in the green.

The US markets ended on a mixed note on Thursday.

Global oil benchmark Brent crude climbed 0.25% to USD 77.61 a barrel.

Foreign Institutional Investors (FIIs) were buyers on Thursday as they bought equities worth Rs 957.25 crore, according to exchange data.

The Sensex climbed 306.55 points or 0.47% to settle at 65,982.48 on Thursday. The Nifty gained 89.75 points or 0.46% to 19,765.20.

(With text input from PTI)