Stocks of Motilal Oswal, BSE, and Other Capital Market Firms Surge Up to 7% Post RBI Rule Deferment

Market Sentiment Boosted as RBI Defers Capital Market Rules

The Reserve Bank of India's (RBI) decision to defer the implementation of rules for banks' exposure to capital markets to July 1 has led to a significant rally in shares of capital market firms on April 1. The RBI's move came on March 30, providing a much-needed relief to the market, which had been roiled by volatility due to the Iran conflict.

The RBI's decision to ease some of the conditions that brokers had pushed back against is also expected to have a positive impact on the market. Until July 1, brokers can continue using bank guarantees backed by 50% margin. Additionally, the RBI has eased capital adequacy norms for banks issuing payment commitments to stock exchange clearing corporations by limiting the exposure on which capital must be held.

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The RBI's amendment directions, issued in February, were initially due to be effective April 1. However, the RBI has now removed restrictions on extending finance to market makers against securities in which the entities operate. Rules on lending to capital market intermediaries were also eased and clarified, allowing funding backed by 100% cash or cash equivalents collateral.

At 10:20 am on April 1, the Nifty Capital Markets index was trading 4.3% higher, with the benchmark indices also experiencing an over 2% rise. This has aided in creating a bullish sentiment towards capital market stocks. The rally in shares of capital market firms is expected to continue until July 1, when the RBI's new rules are set to come into effect.