Stock market watch: What to expect from the week ending October 1, 2021

Sensex goes above 60k: Upside momentum has increased significantly after Nifty crossed the 16,000 barrier decisively. With Sensex going above the 60,000 mark for the first time, market participants are in seventh heaven now. Nifty also came very close to the 18,000 mark and reached a high of 17,948 on 24 September.

Strong earnings momentum is the key driver for this rally. Market sentiment is also buoyed by the vaccination momentum. Though the US Federal Reserve has indicated it could begin scaling back asset purchases in November and complete the process by mid-2022, equity markets across the globe did not react negatively.

What should investors do now? First, be ready for increased volatility because valuation has reached elevated levels. “Given rich valuations, one cannot ignore intermittent volatility. However, we expect the positive momentum to continue,” says Motilal Oswal, MD & CEO, Motilal Oswal Financial Services.

Since Nifty is trading within the broadening formation and the upper and lower levels are at 18,070 and 17,400 respectively, there is no major worry on the technical front. However, there might be some volatility next week because of the F&O expiry on 30 September. “Since we are close to the upper end of the channel, don’t take any aggressive long bets now,” says Sacchidanand Uttekar, Deputy VP, Trade Bulls Securities.

(Narendra Nathan/ET Bureau)

Sector update: BFSI
AA framework to benefit lenders and borrowers

The RBI has issued licenses to several entities to enable the Account Aggregator (AA) framework, considered to be a game changer in lending/financial services after UPI in payments.

India’s AA framework is far superior as it will aggregate data from multiple FIPs (including non-banks) and non-FIPs, unlike open banking data aggregators in US. The AA framework was created through an inter-regulatory decision, to facilitate frictionless and secure data flow between FIPs and financial information users (FIUs), subject to customer consent. It will reduce data arbitrage among FIPs and FIUs while providing customers better digital control over their data.

Currently, CAMS FinServ, Cookiejar Technologies (Finvu), FinSec AA Solutions (OneMoney) and National E-Governance Services Asset Data are authorized as account aggregators. PhonePe, Perfios and Yodlee have received in-principle approval and many more will join the framework. Major banks like SBI, ICICI, Axis, IDFC First, Kotak, HDFC, IndusInd and Federal Bank and some NBFCs have joined the network as FIPs/FIUs.

MSMEs and new-to-credit borrowers will be among the major beneficiaries of the AA framework. Using the AA framework, lenders across the spectrum will be able to give credit based on verified data. A recurring consent can enable FIUs to keep an eye on the customer’s financial health/leverage and facilitate debt consolidation. It will also help FIP to cross-sell other products. Retail consumers too will benefit as they will get better lending and deposit rates.

The AA framework was conceptualized way back in 2016, but it faced hurdles. Banks are now ready to democratize data and participate in the ensuing financial boom accelerated by Fintechs.

(Emkay)