Indian Markets End Lower as Services PMI Hits 11-Month Low; RBI Tightens Lending Norms
Indian markets ended lower despite Nifty defending 26,150 level, with weakness in Reliance Industries and HDFC Bank offsetting gains in financials, metals and pharmaceuticals. Services PMI dropped to 58.0 in December from 59.8 in November, marking an 11-month low due to softening demand and stalled hiring. RBI issued new amendment directions on related-party lending to strengthen governance across banks, NBFCs, and other financial institutions.
*this image is generated using AI for illustrative purposes only.
Indian equity markets faced headwinds as benchmark indices ended lower despite selective strength in certain sectors. The session highlighted mixed corporate developments and regulatory actions that shaped investor sentiment across multiple industries.
Market Performance Shows Mixed Signals
Indian equity benchmarks closed Tuesday's session in negative territory, weighed down by losses in major stocks including Reliance Industries, Trent, and select consumption names. However, pockets of strength emerged in financials, metals, and pharmaceuticals sectors. The Nifty managed to defend the crucial 26,150 level during the weekly expiry session, despite pressure from heavyweight stocks such as Reliance Industries and HDFC Bank.
Services Sector Momentum Weakens
India's services sector growth showed signs of deceleration in December, with the HSBC India Services Purchasing Managers' Index slipping to concerning levels. The PMI data revealed a notable slowdown in economic momentum.
| Metric: | December | November | Change |
|---|---|---|---|
| Services PMI: | 58.0 | 59.8 | -1.8 points |
| Performance: | 11-month low | Previous month | Decline |
| Flash Estimate: | 59.1 | - | Below expectation |
The December reading came in below the flash estimate of 59.1, indicating that fresh demand softened and hiring activity stalled. While the PMI remained above the 50-mark that separates expansion from contraction, the decline suggests moderating growth in the services sector.
Corporate Developments and Regulatory Actions
Reliance Industries strongly denied reports suggesting Russian oil cargoes were headed to its Jamnagar refinery, calling such claims "blatantly untrue" and stating they have tarnished the company's image. The company clarified it is not expecting any Russian cargo in January.
Shares of Indian Energy Exchange surged as much as 13% after the lawyer representing the Central Electricity Regulatory Commission indicated readiness to take instructions from the Electricity Appellate Tribunal to withdraw the July 23, 2025 order. This development provided significant relief to investors, as the original order had caused IEX shares to fall nearly 30% in a single trading session.
RBI Strengthens Financial Institution Oversight
The Reserve Bank of India issued Amendment Directions on Lending to Related Parties, targeting enhanced governance and transparency across the financial sector. The new regulations apply to multiple institution types and include provisions for non-compliant transactions under specific conditions.
| Institution Type: | Coverage |
|---|---|
| Banks: | Included |
| NBFCs: | Included |
| Cooperative Banks: | Included |
| AIFIs: | Included |
These directions aim to tighten governance around transactions involving related parties, strengthening the overall regulatory framework for financial institutions.
Steel Sector Under Regulatory Scrutiny
The Competition Commission of India sought responses from steel companies following its investigation arm's findings of prima facie cartelisation concerns. Sources indicated that the probe, headed by CCI's director general, concluded that around 35 steel companies have prima facie indulged in cartelisation. However, the Competition Commission has not accepted or rejected these findings at this stage, with no ruling passed yet on the allegations.
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