Strong earnings growth is the main reason for this growth. The market sentiment is also upbeat with the pace of vaccination. Although the US Federal Reserve has indicated that it may start reducing asset purchases in November and complete the process by mid-2222, equity markets across the world did not react negatively.
What should investors do now? First, be prepared for increased volatility as valuations hit higher levels. “Given the rich valuations, one cannot ignore the intermittent volatility. However, we expect the positive momentum to continue,” says Motilal Oswal, MD & CEO, Motilal Oswal Financial Services.
Since Nifty is trading in a bullish range with upper and lower levels at 18,070 and 17,400 respectively, there is nothing to worry about on the technical front. However, there could be some volatility next week due to the F&O closing on 30th September. Sachchidanand Uttekar, deputy VP, Trade Bulls Securities, says, “Since we are close to the upper end of the channel, do not make any aggressive long bets now.
(Narendra Nathan / ET Office)
Sector Update: BFSI
AA framework to benefit lenders and borrowers
RBI has issued licenses to several entities to enable Account Aggregator (AA) framework which is 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 the US. The AA framework was created through an inter-regulatory decision, to facilitate a frictionless and secure data flow between FIPs and Financial Information Users (FIUs), subject to customer consent. This will reduce the data arbitrage between FIP and FIU while giving customers better digital control over their data.
Currently, CAMS FinServ, Cookiejar Technologies (Finvu), FinSec AA Solutions (OneMoney) and National e-Governance Services Asset Data have been 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 lend based on verified data. A recurring consent can enable the FIU to track the financial health/leverage of the client and facilitate debt consolidation. It will also help FIPs to cross-sell other products. Retail consumers will also benefit as they will get better lending and deposit rates.
The AA framework was conceptualized long back in 2016, but faced hurdles. Banks are now ready to democratize data and participate in the accelerated financial boom fueled by fintechs.
(MK)