- Big negative: May mutual fund data showed net equity inflow at Rs.22,897 cr. v/s Rs.38,426 cr. MoM. Inflows may decline further, SIP cancellations may rise and redemption pressure may increase in coming months if Government does not reduce STT and LTCG.
- As per market veteran, it is better to adopt a wait-and-watch approach till June quarter results. Q1 results season will begin from the second week of July and continue till 14-8-2026. Sometimes capital protection becomes more important than earnings during unfavourable environments.
- Time has changed. One interesting observation is that the total traded value of shares like Reliance and TCS is now almost at par with many mid- and small-cap stocks.
- Big negative in bearish and uncertain sentiment: RBI to implement new funding rules from 1st July. (a) Intraday margin funding by banks: Previous rule: Banks could provide short-term credit lines to support intraday margin requirements and settlement gaps for brokers. Revised rule: Banks are not permitted to fund margin-related intraday exposures. Funding allowed only for settlement/pay-in mismatches under secured exposure norms. Impact: Brokers face higher working capital needs, higher cost of capital, reduced intraday liquidity and pressure on derivatives activity. (b) Bank guarantees (BG) for proprietary trading: Previous rule: BGs could be issued against partial collateral, enabling leverage (e.g., Rs.100 FD supporting Rs.200 exposure). Revised rule: BGs must be fully secured with 100% cash or cash equivalents, removing leverage benefit. Impact: Lower capital efficiency, higher funding cost and reduced profitability for prop, HFT and arbitrage desks. (c) Proprietary trading structural impact: Previous rule: Prop trading benefited from bank funding flexibility and BG leverage, contributing ~40% of F&O turnover. Revised rule: Tightened funding norms increase capital intensity and reduce leverage-driven activity. Impact: Potential 15–20% decline in derivatives volumes, lower liquidity and wider spreads. (d) Margin Trading Facility (MTF): Previous rule: Bank participation was allowed with relatively flexible collateral norms; exposure stood at ~Rs.1.1–1.2 lakh cr. Revised rule: Stricter secured norms apply; ambiguity remains between 100% cash requirement vs 50% cash and 50% eligible assets. Impact: Limited systemic disruption due to low bank share (<1%), but reduced attractiveness of bank-funded MTF. (e) Client-side bank guarantees and collateral: Previous rule: 50% margin structure with 25% cash and 25% non-cash collateral; receivables not widely accepted. Revised rule: Structure remains, but receivables now allowed as eligible collateral. Impact: Better collateral flexibility for brokers, though overall funding environment remains tighter.
- As per market veteran, money gives options, not meaning. Money provides security, flexibility and the ability to handle uncertainties, but its real value lies in the choices it creates. Wealth is built through small disciplined habits like regular saving, monthly investing and avoiding unnecessary expenses. In finance, consistency matters more than intensity.
- Very big negative: RBI survey shows consumer sentiment weakening as Indians grow more concerned about inflation. As per market veteran, rising inflation may reduce demand and negatively impact many companies.
- FMCG sector alert: Price hikes across categories seen. HUL increased Dove and Pear soap prices by 4-5%, Rin and Wheel detergent prices by 5-11%, Colgate raised toothpaste prices by 4-9%, Marico increased Saffola oil prices by 6-11% and Emami raised Zandu Balm prices by 7%. Rising inflation may reduce consumers’ buying capacity.
