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Sensex, Nifty cut some of gains in late morning session
Aug-04-2021

Indian equity benchmarks were trading in green terrain but cut some of their gains in late morning session, with both Sensex and Nifty trading higher, on the back of positive cues from other Asian markets. Gains got trimmed, after India's services sector remained in contraction territory for the third straight month in July, as business activity, new orders and employment declined further largely due to the COVID-19 pandemic and local restrictions. The seasonally adjusted India Services Business Activity Index rose from 41.2 in June to 45.4 in July, but was stuck in the red due to subdued demand conditions amid the COVID-19 crisis. Besides, the government has said that it expects the total debt as percentage of gross domestic product (GDP) to increase to 61.7 per cent (provisional) in 2021-22 (FY22) from 60.5 per cent (provisional) in the previous fiscal. At the same time, public debt would rise to 54.2 per cent in the current financial year from 52 per cent in 2020-21.

On the global front, Asian markets were trading mostly in green, after China's service sector activity logged a steeper growth in July as the successful containment of the recent uptick in COVID-19 cases led to greater customer numbers and boosted new order intakes, survey results from IHS Markit showed on Wednesday. At 54.9 in July, the Caixin Purchasing Managers' Index rebounded from June's 14-month low of 50.3 and signaled a sharp and accelerated expansion of services activity.

The BSE Sensex is currently trading at 54181.18, up by 357.82 points or 0.66% after trading in a range of 54034.31 and 54440.80. There were 12 stocks advancing against 17 stocks declining, while 1 stock remained unchanged on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.43%, while Small cap index was down by 0.41%.

The only gaining sectoral indices on the BSE were Bankex up by 1.58% and Power up by 0.32%, while Realty down by 1.38%, Telecom down by 1.27%, Consumer Durables down by 0.73%, FMCG down by 0.72% and Oil & Gas down by 0.49% were the top losing indices on BSE.

The top gainers on the Sensex were HDFC up by 3.34%, ICICI Bank up by 2.48%, Kotak Mahindra Bank up by 2.03%, HDFC Bank up by 1.92% and Axis Bank up by 1.52%. On the flip side, Sun Pharma down by 1.37%, Nestle down by 1.00%, Titan Co down by 0.90%, SBI down by 0.77% and Tech Mahindra down by 0.73% were the top losers.

Meanwhile, with a view to mitigate risks and ensure continuity of service, the Reserve Bank of India (RBI) has issued a detailed framework for outsourcing of activities by Payment System Operators (PSOs). Under the framework, PSOs will not outsource core management functions, including risk management and internal audit; compliance and decision-making functions such as determining compliance with KYC norms. Also, a PSO will be required to carefully evaluate the need for outsourcing its critical processes and activities, as well as selection of service providers based on comprehensive risk assessment. The RBI has also clarified that outsourcing of any activity by the PSO will not reduce its obligations, and those of its board and senior management, who will ultimately be responsible for the outsourced activity.

The framework said ‘The PSO shall, therefore, be liable for the actions of its service providers and shall retain ultimate control over the outsourced activity’. It added the outsourcing arrangements will not affect the rights of a customer of a payment system against the PSO, as well as those of a payment system participant against the PSO.RBI said the PSOs, by virtue of services they provide and the construct of models on which they operate, largely outsource their payment and settlement-related activities to various other entities. The framework has been issued in order to enable effective management of attendant risks in outsourcing of such activities.

Outsourcing is defined as use of a third party (service provider) to perform activities on a continuing basis that would normally be undertaken by the PSO itself, now or in the future. As per the framework, a PSO which has outsourced its customer grievance redressal function must also provide its customers the option of direct access to its nodal officials for raising and / or escalating complaints. Also, the PSO should have a board-approved comprehensive outsourcing policy. The framework also lists out the role of the board and responsibilities of the senior management. It added the service provider will also have to develop and establish a robust framework for documenting, maintaining and testing business continuity and recovery procedures arising out of any outsourced activity.

The CNX Nifty is currently trading at 16217.10, up by 86.35 points or 0.54% after trading in a range of 16176.15 and 16290.20. There were 17 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were HDFC up by 3.56%, ICICI Bank up by 2.64%, Kotak Mahindra Bank up by 2.23%, HDFC Bank up by 2.02% and Axis Bank up by 1.75%. On the flip side, Grasim Industries down by 1.66%, Sun Pharma down by 1.48%, Tata Motors down by 1.12%, Hindalco down by 1.11% and BPCL down by 0.96% were the top losers.

Asian markets were trading mostly in green; Hang Seng increased 368.10 points or 1.41% to 26,562.92, Taiwan Weighted strengthened 54.46 points or 0.31% to 17,608.22, KOSPI rose 39.92 points or 1.23% to 3,277.06, Straits Times advanced 32.94 points or 1.05% to 3,182.19, Shanghai Composite gained 19.68 points or 0.57% to 3,467.67 and Jakarta Composite soared 18.22 points or 0.3% to 6,148.79. On the flip side, Nikkei 225 slipped 70.64 points or 0.26% to 27,571.19.

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