Strong earnings momentum is the main driver of this rally. Market sentiment is also supported by the vaccination momentum. Although the US Federal Reserve has indicated that it may start reducing asset purchases in November and complete the process by mid-2022, stock markets around the world have not reacted negatively.
What should investors do now? First, be prepared for increased volatility as the valuation has reached high levels. âGiven the rich valuations, one cannot ignore the intermittent volatility. However, we expect the positive momentum to continue, âsaid Motilal Oswal, Managing Director and CEO of Motilal Oswal Financial Services.
Since Nifty is trading within the widening formation and the upper and lower levels are at 18,070 and 17,400 respectively, there are no major technical concerns. However, there could be some volatility next week due to the F&O expiration on September 30th. âAs we are near the upper end of the channel, don’t take aggressive long bets now,â said Sacchidanand Uttekar, assistant vice president, Trade Bulls Securities.
(Narendra Nathan / ET Office)
Sector Update: BFSI
An AA framework for the benefit of lenders and borrowers
The RBI has issued licenses to several entities to activate the Account Aggregator (AA) framework, seen as a game changer in loan / 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 bank data aggregators in the United States. The AA framework was created by an inter-regulatory decision, to facilitate a frictionless and secure data flow between FIPs and Financial Information Users (FIUs), subject to client consent. This will reduce data arbitrage between FIPs and FIUs while giving clients better digital control of their data.
Currently, CAMS FinServ, Cookiejar Technologies (Finvu), FinSec AA Solutions (OneMoney) and National E-Governance Services Asset Data are licensed as account aggregators. PhonePe, Perfios and Yodlee have received approval in principle and many more will join the framework. Big banks like SBI, ICICI, Axis, IDFC First, Kotak, HDFC, IndusInd and Federal Bank and some NBFC have joined the network as FIP / FIU.
MSMEs and new credit borrowers will be among the main beneficiaries of the AA framework. Using the AA framework, lenders across the spectrum will be able to extend credit based on verified data. Recurring consent can allow FIUs to keep an eye on the financial health / leverage of the client and facilitate debt consolidation. It will also help FIP cross-sell other products. Retail consumers will also benefit, as they will benefit from better loan and deposit rates.
The AA framework was conceptualized in 2016, but it has encountered obstacles. Banks are now ready to democratize data and participate in the financial boom that follows and accelerated by fintechs.