Morning Alert. *Bank direct lending to NBFCs to moderate at Rs | Equity99

Morning Alert.
*Bank direct lending to NBFCs to moderate at Rs 1.7-1.9 trn in FY25: ICRA*
With increased risk weights and exposure reaching sectoral limits, bank direct lending to non-banking finance companies (NBFCs) in the country is expected to be Rs 1.7-1.9 trillion in the next financial year (FY25), according to rating agency ICRA. The incremental direct bank lending to NBFCs was Rs 1.61 trillion in the 10-month of the current financial year (FY24). ICRA said bank credit to the NBFC sector has moderated in the past few months. Going forward, banks would be more constrained to raise the share of their exposures to the sector. This would be in the backdrop of their internal sectoral limits and the recent increase in risk weights by the Reserve Bank of India for bank exposures to the NBFCs. In November 2023, RBI hiked risk weight by 25 per cent where it (risk weight) was below 100 per cent, signalling the regulator’s concerns about high pace of bank lending to NBFCs. According to RBI data, the outstanding bank loans to NBFCs stood at Rs 15.03 trillion in January 2024. Bank lent Rs 3.08 trillion to finance companies in FY23. It was much lower at Rs 73,831 crore in FY22. The estimated incremental direct bank lending of Rs 1.7-1.9 trillion for FY25 would be about 33 per cent of the total base case incremental funding requirements of the sector (Rs 5.3-5.5 trillion) in FY25. This is against meeting an estimated 38 per cent of incremental funding requirements in FY24 via direct lending, ICRA said.

*United States Federal Reserve expected to cut rates, lift President Joe Biden's prospects*
As the presidential campaign season intensifies, the U.S. Federal Reserve is poised to lower interest rates, which might help President Joe Biden given that surveys indicate the public disapproves of his management of the economy. The Federal Reserve might have a significant, if unsettling, impact on election-year sentiment by influencing perceptions of persistently high inflation and rising housing costs, which have hampered Biden's chances of reelection. Rate reductions will also encourage detractors, foremost among them being Donald Trump, the Republican opponent, to claim that an organisation established to serve as an impartial financial regulator is swaying the political balance in favour of Biden. In fact, Trump stated to Fox Business last month that he expects Fed Chair Jerome Powell—whom Trump appointed to lead the central bank in 2018 but quickly came to dislike—"to do something to probably help the Democrats... if he lowers interest rates." In other words, Trump isn't even waiting for the first rate cut to occur before making that claim.


*Global market action*
Dow Jones – Up by 0.12% or 48.50 points
FTSE – Down by 0.17% or 13.35 points
CAC – Flat by 0% or 0.32 points
DAX – Up by 0.30% or 55.37 points
Gift Nifty – Up by 0.23% or 50.50 points

*FII/DII activities*
FII – Sold 3,309.76 Cr worth of shares
DII – Bought 3,764.87 Cr worth of shares.

*Stocks with high delivery percentage*
Marico – 98.25%
Dabur India – 96.64%
Bharti Airtel – 95.55%
Infosys– 94.69%
Zee Entertainment– 78.52%

*Primary market activities*
IPO opening today
SRM Contractors Ltd (Main Board) – Issue size 130 Cr

*Commodities updates*
Gold – Rs 66010/10gm, Silver – Rs 74898/kg, Brcrude – Rs 6820/barrel, Copper – Rs 757.80/kg.

*Corporate News*
Berger to produce sustainable paint stabilisers with tech from RK Mission college.

Shree Cement enters ready mix concrete segment.

Hindustan Aeronautics signs contract with Guyana Defence Force

ITC acquires stake in International Travel House, Maharaja Heritage Resorts

Adani Ports to buy 95% of Odisha's Gopalpur Port for $162 million