State-run banks hit by proposed regulations

India's stock market witnessed a mixed trading session on Monday, with the Nifty 50 closing lower primarily due to a decline in state-run banks. This drop was triggered by concerns over the potential impact of newly proposed rules on their profitability. On the other hand, the S&P BSE Sensex managed to edge slightly higher by 0.02%, buoyed by gains in IT stocks and Kotak Mahindra Bank.

The Nifty PSU index, which comprises state-owned banks, experienced a significant decline of 3.66% following the release of draft guidelines on project finance by the Reserve Bank of India. Analysts are wary of the proposed norms potentially affecting the margins of these lenders, with Punjab National Bank leading the losses with a 6.41% drop.

Meanwhile, the financial services index closed lower by 0.25%, with notable declines seen in state-run non-bank lender Power Finance Corps (PFC). In contrast, private lender Kotak Mahindra Bank saw a 5% increase after surpassing fourth-quarter profit expectations.

U.S. rate-sensitive IT stocks experienced a 0.94% gain in response to softer-than-expected U.S. job growth data, leading to revised expectations of two U.S. rate cuts this year. Britannia surged by 6.7% on the Nifty 50 following impressive fourth-quarter margin growth, while Titan faced a 7.18% decline due to quarterly profit missing estimates attributed to higher gold prices and increased discounts.

On the regulatory front, the Adani group's seven-listed firms encountered losses ranging from 0.3% to 4% after receiving notices of regulatory violations from the markets regulator. Additionally, domestically-focused small- and mid-cap stocks closed lower, shedding 1.5% and 0.54% respectively.

In conclusion, the Indian stock market displayed a diverse range of movements on Monday, with state-run banks facing pressure from proposed regulations while certain sectors like IT and private banking showed resilience. Investors are advised to closely monitor regulatory developments and quarterly earnings reports for potential market impacts in the coming days.