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Benchmark indices ended with strong gains on Monday, supported by a rally in HDFC twins post merger announcement. All the sectoral indices on the NSE ended in the green. The Nifty closed above the 18,000 mark after a hitting a day's high of 18,114.65 in morning trade.
As per the provisional closing data, the S&P BSE Sensex added 1,335.05 points or 2.25% at 60,611.47. The Nifty 50 index gained 382.95 points or 2.17% at 18,053.35.
The broader market lagged the frontline indices. The S&P BSE Mid-Cap index added 1.27% and the S&P BSE Small-Cap index rallied 1.68%.
Buyers outpaced sellers. On the BSE, 2667 shares rose and 830 shares fell. A total of 153 shares were unchanged.
Economy:
The seasonally adjusted S&P Global India Manufacturing Purchasing Managers' Index (PMI) stood at 54 in March, falling from 54.9 in February. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease.
Business conditions in India improved in March, but the latest results showed slower expansions in factory orders and production as well as a renewed decline in new export orders. At the same time, price indices increased since February to signal mounting price pressures. Inflation concerns meanwhile dampened business confidence, which fell to its lowest level in two years, said S&P Global on 4 April.
Goods producers indicated that new orders continued to increase in March. The rate of expansion eased to a six-month low, but remained marked, the release stated.
On the macro front, India's merchandise exports hit a record high of $418 billion in the 2021-22 fiscal on higher shipments of petroleum products, engineering goods, gem and jewellery and chemicals, according to official data released on Sunday.
India's annual median GDP growth forecast stood at 7.4% for 2022-23, according to a survey by the Federation of Indian Chambers of Commerce and Industry (FICCI) released on April 3. The Economic Outlook Survey estimates a minimum and maximum growth of 6% and 7.8%, respectively.
HDFC, HDFC Bank Merger:
Shares of HDFC jumped 9.15% HDFC Bank rallied 9.81% to Rs 1,654 after the banking behemoths announced merger.
The board of Housing Development Finance Corporation (HDFC) on Monday (4th April) approved a composite scheme of amalgamation of HDFC into HDFC Bank, and their respective shareholders and creditors. The subsidiaries and associates of HDFC will shift to HDFC Bank.
Shareholders of HDFC as on the record date will receive 42 shares of HDFC Bank (each of face value of Re 1), for 25 shares held in HDFC (each of face value of Rs 2), and the equity share(s) held by HDFC in HDFC Bank will be extinguished as per the Scheme.
As a result of this, upon the Scheme becoming effective, HDFC Bank will be 100% owned by public shareholders and existing shareholders of HDFC will own 41% of HDFC Bank.
The proposed transaction is to create a large balance sheet and net-worth that would allow greater flow of credit into the economy. It will also enable underwriting of larger ticket loans, including infrastructure loans -- an urgent need of the country, HDFC said in a statement.
As of 31 December 2021, HDFC Bank's total advances stood at Rs 12,68,863 crore and HDFC's total advances stood at Rs 5,25,806 crore. Post merger, pro forma total advances of the combined entity is expected to be Rs 17,86,669 crore.
The proposed transaction will result in reducing HDFC Bank's proportion of exposure to unsecured loans. The merger is expected to result in bolstering the capital base and bringing in resiliency in the balance sheet of HDFC Bank.
Post the combination, HDFC Bank's customers will be offered mortgages as a core product in a seamless manner. HDFC Bank will also leverage the long tenor mortgage relationship to offer varied credit and deposit products enabled through better insights through-out the customer life-cycle. This will result in an enhanced value proposition and customer experience for all customers of the combined entity.
The boards of HDFC and HDFC Bank believe that the merger will create long-term value for all stakeholders, including customers, employees and shareholders of both entities. The amalgamation of the two entities will provide further impetus to the Government's vision of “Housing for All”.
The merger is expected to close within 18 months (Q2 / Q3 FY24), subject to completion of regulatory approvals and other customary closing conditions. HDFC had total assets of Rs 6,23,420.03 crore, turnover Rs 35,681.74 crore and net worth of Rs 1,15,400.48 crore as on 31 December 2021. Meanwhilre, HDFC Bank had total assets Rs 19,38,285.95 crore, turnover of Rs 1,16,177.23 crore (includes other income) and net worth of Rs 2,23,394 crore, as on 31 December 2021. HDFC Investments and HDFC Holdings are wholly-owned unlisted subsidiaries of HDFC. These two firms are non-banking finance companies, registered with RBI, engaged in the business of investments in stocks, shares, debentures and other securities.
Stocks in Spotlight:
Avenue Supermarts (D-Mart) rose 0.65%. The standalone revenue stood at Rs 8,606.09 crore in Q4 March 2022. Avenue Supermarts, which owns and operates retail chain D-Mart, on Sunday said its standalone revenue from operations during the quarter ended March 2022 increased 17.8% to Rs 8,606.09 crore from Rs 7,303.13 crore in the same quarter last year. The company's revenue stood at Rs 6,193.53 in Q4 March 2020, while it was Rs 5,033.37 crore in Q4 March 2019. The total number of stores as of 31 March 2022 stood at 284, Avenue Supermarts said in an exchange filing.
Kalyan Jewellers India rallied 5%. The company witnessed a sustained buoyancy in consumer sentiments and the continuing shift in consumer demand from the unorganized to the organized segment. The business in India saw a 7% decline in revenues when compared to the same quarter in the prior year, although when compared to the same quarter two years ago (Q4 FY20), the recently concluded quarter saw over 47% growth, as a result of acceleration in the business performance through the COVID pandemic and the increase in footfalls across the store network over the past several quarters. On a consolidated basis (including the Middle East), the business has seen 6% decline in revenues when compared to the same quarter in the prior year and over 33% growth when compared to the same quarter two years ago (Q4 FY20).
Mahindra & Mahindra (M&M) Financial Services rose 1.45% after the company announced robust Q4 FY22 business update. In March 2022, the business continued its momentum with a disbursement of approximately Rs 3,832 crore, delivering a 66% YoY growth. The disbursement for FY2022 stood at approximately Rs 27,466 crore, registered a YoY growth of 45%. This has led to marginal growth in business assets over previous year. The collection efficiency (CE) was at 109% for March 2022, similar as March 2021. The buoyancy in collections has led to significant sequential improvement in asset quality resulting in Stage 3 assets as of March 2022 being lower than as of March 2021. Similarly, Stage 2 assets have also seen meaningful improvement over 31 December 2021 level.
SML Isuzu hit an upper circuit limit of 20% to Rs 707.20 after the company increased prices of its products from 4 April 2022. The company on 3 April 2022 announced that it has decided to increase prices of its products (across all models - trucks & buses) in the range of 3% to 4%, effective 4th April 2022. While the company is taking actions to absorb the impact of sharp increase in commodity prices and other input costs, the upward revision has been necessitated to partially offset the impact of increased costs, it said in a statement.
NMDC gained 2.28% after the PSU miner's iron ore production jumped nearly 9% to 4.98 MT in March 2022 as against 4.57 MT in March 2021. The company's iron ore sales aggregated to 4.21 MT in March 2022 as against 4.08 MT in March 2021, rising 3.1% year-on-year. On a sequential basis, the PSU miner's iron ore production rose 15.5% and iron ore sales rose 6% in March 2022 over February 2022.
Bajaj Auto rose 0.67%. The two wheeler maker's total sales fell 20% to 297,188 units in March 2022 as compared to 369,448 units sold in March 2021. On a sequential basis, the company's total sales fell nearly 6% from 316,020 units sold in February 2022. The total two-wheelers sale declined 22% to 256,324 units in March 2022 as against 330,133 units dispatched in March 2021. However, commercial vehicles sales increased 4% to 40,864 units in March 2022 from 39,315 units sold in March 2021.
Global Markets:
Shares in Europe and Asia advanced on Monday. Chinese tech stocks climbed after a recent signal by Chinese authorities of progress toward resolving an audit dispute, which had threatened U.S.-listed Chinese firms with delisting.
Meanwhile, investors were cautious as the European Union plans to introduce fresh sanctions against Moscow in the wake of the new reported atrocities.
Ukraine's top prosecutor reportedly said 410 bodies had been found in towns recaptured from retreating Russian forces around Kyiv as part of an investigation into possible war crimes, while Ukrainian President Volodymyr Zelenskyy accused Russia of genocide. Russia has denied allegations that its forces killed civilians in Bucha, 23 miles northwest of Kyiv.
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