Shares may correct on profit booking

Market is seen opening lower as mixed leads from other Asian indices may trigger profit booking after last week's surge in domestic indices. Trading of Nifty 50 index futures on the Singapore stock exchange indicates that the Nifty could fall 20.50 points at the opening bell.

Overseas, Asian shares were mixed Monday as investors watched for developments from US President Donald Trump's state visit to Japan as well as results from the European parliamentary election.

US stocks rose on Friday, but sentiment remained fragile as investors worried the US-China trade war is hurting economic growth. US durable goods orders dropped 2.1% last month amid a slowdown in exports and a buildup in inventories.

Closer home, foreign portfolio investors (FPIs) bought shares worth a net Rs 2,026.33 crore on 24 May 2019, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) sold shares worth a net Rs 195.35 crore on 24 May 2019, as per provisional data.

Key benchmark indices logged strong gains on Friday, 24 May 2019, on steady buying demand in index pivotals. Sentiment was boosted by an overnight slide in crude oil prices. Narendra Modi-led NDA's thumping victory in Lok Sabha polls also supported buying. A strong mandate for the NDA could mean that economic reforms would be decisively implemented. The barometer index, the S&P BSE Sensex, gained 623.33 points or 1.61% at 39,434.72. The Nifty 50 index gained 187.05 points or 1.6% at 11,844.10.

On the economic front, the Reserve Bank of India (RBI) on Friday, 24 May 2019, said it has decided to conduct purchase of Government securities under Open Market Operation (OMO) for Rs 15000 crore on 13 June 2019.

In a separate announcement on Friday, 24 May 2019, RBI placed a draft circular on the "Liquidity Risk Management Framework for Non-Banking Financial Companies (NBFCs) and Core Investment Companies (CICs)" to be adopted by all deposit taking NBFCs; non-deposit taking NBFCs with an asset size of Rs 100 crore and above; and all CICs registered with the Reserve Bank.

The draft guidelines cover application of generic Asset Liability Management (ALM) principles, granular maturity buckets in the liquidity statements and tolerance limits, liquidity risk monitoring tool and adoption of the "stock" approach to liquidity. In addition, the draft proposes to introduce Liquidity Coverage Ratio (LCR) for all deposit taking NBFCs; and non-deposit taking NBFCs with an asset size of Rs 5000 crore and above. With a view to ensuring a smooth transition to the LCR regime, the proposal is to implement it in a calibrated manner through a glide path over a period of four years commencing from April 2020 and going upto April 2024.

Further, RBI on Friday fixed the investment limit at Rs 54,606.55 crore for foreign portfolio investors (FPIs) under the voluntary retention route (VRR), which allows to park funds in both government securities as well as corporate debt. VRR for investments by FPIs was introduced on March 1. Limits for investment in debt by FPIs were offered for allotment 'on tap' during the March 11-April 30 period. Based on the feedback received, and in consultation with the government, the RBI said it has made certain changes in the scheme to increase its operational flexibility. The minimum retention period shall be three years. During this period, FPIs shall maintain a minimum of 75% of the allocated amount in India, RBI said.

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