News Wrap | China's Shanghai Composite Tanks; Sensex & Nifty Slip; RBI Maintains Status Quo

Good evening, and welcome to Business Hook’s daily news podcast, where we bring you a roundup of the day’s top business stories. I’m Avni Raja, and today is the 9th of October, 2024.

Let’s start with Asian equity markets – where China’s Shanghai Composite snapped its ten-session gaining streak, plunging seven percent in a single day. Hong Kong’s Hang Seng also slipped more than one percent, following Tuesday’s drop of nearly ten percent. The Chinese equity market has seen a sharp sell-off as investors are disappointed with the stimulus measures announced by Chinese authorities so far. Markets were initially buoyed by the steps unveiled by the Chinese government just before the Golden Week holidays, but that rally has now fizzled out due to the lack of further announcements.

Back home, the Sensex and the Nifty ended the day lower, underperforming the broader market. The Sensex dropped two-tenths of a percent, closing below 81,500, while the Nifty slipped one-tenth of a percent to finish the day just under 25,000. However, the Midcap index gained nearly one percent. Of the fifty stocks listed on the Nifty, 31 advanced in Tuesday’s trade, while 19 declined. Most FMCG giants were among the top laggards on the Nifty, with ITC leading the decline. Among the gainers, Cipla, Trent, and Tata Motors topped the chart, each rising by over two percent.

One of the key drivers for Indian equities on Tuesday was the monetary policy decision. The RBI’s Monetary Policy Committee decided to keep its key interest rate unchanged at 6.5% in a split decision, with one MPC member voting for a 25-basis point reduction. The Indian central bank noted that, although inflation eased in July and August, it still needs to remain vigilant. The RBI expects a significant rise in inflation in September due to adverse base effects and a surge in food prices.

In addition to the monetary policy decision, the RBI announced two key changes in the payments space. To promote wider adoption of UPI, the RBI has increased the per-transaction limit for UPI-123 Pay to 10,000 rupees. For UPI Lite, it has raised the wallet limit to 5,000 rupees and the per-transaction cap to 1,000 rupees. The RBI is also introducing a facility that will allow the remitter to verify the name of the account holder before transferring funds through RTGS or NEFT.

The big headline from the IT sector – tech giants Infosys and Microsoft have expanded their collaboration to accelerate global customer adoption of generative AI and Microsoft Azure. According to Infosys, this strategic partnership aims to help their joint customers realise the value of their technology investments and achieve transformative outcomes.

A major story from the financial sector – Nikhil Kamath, co-founder of the discount broking giant Zerodha, has revealed that they have been attempting to enter the banking space but have not succeeded in obtaining a licence. In a conversation with CNBC-TV18, Kamath said, and I quote, "We really want to be a bank, but no matter how much we've tried over the past several years, we haven’t been allowed to," end of quote. He attributed this to a lack of access to the regulators.