Indian shares declined on Friday as traders digested a draft Reserve Bank of India proposal to tighten regulations on non-bank finance companies, while Middle East tensions and rising oil prices dampened market sentiment, reversing recent gains.
Indian shares closed lower on Friday as traders weighed a draft Reserve Bank of India proposal that could reshape lending by non-bank finance companies, while renewed tension in the Middle East kept a lid on sentiment. The Nifty 50 slipped 0.27% to 24,570.65 and the Sensex ended at 78,491.02, trimming what had been a two-day recovery.
The sharpest pressure hit financial stocks after the central bank proposed tighter rules for non-bank financial companies, including a move away from revolving credit products and towards conventional term loans. Bajaj Finance was among the biggest laggards, falling nearly 6% as investors assessed the possible effect on earnings and assets under management. The draft, released on August 6, is intended to improve transparency and risk controls in retail lending, though the RBI has said the plan would not apply to lenders that are specifically authorised to issue credit cards.
The proposal is part of a wider effort by the RBI to reshape the non-bank finance landscape. Separately, the central bank has also suggested broader access to money markets for some NBFCs and a new, more transparent method for identifying upper-layer firms, according to Business Standard and Moneycontrol. Under those draft changes, the regulator would use an asset-based threshold of more than Rs 1 lakh crore for upper-layer classification, replacing the current parametric system.
Outside India, investors stayed alert to developments in the Middle East, where fears of disruption to shipping routes such as the Strait of Hormuz pushed crude prices higher. That matters for India because it is heavily dependent on imported oil, making higher energy costs a potential drag on inflation, the trade balance and the rupee. The India VIX, a gauge of expected market volatility, inched up to 12.37, while weakness in global markets reinforced the cautious tone.
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