Market LIVE: Sensex down 250 points, Nifty hovers around 18,000; HDFC twins drag

Stock Market LIVE Updates: Benchmark Indian equity indices were down on Tuesday as heavyweight financial stocks slipped after a sharp jump in the previous session

Indian indices were weak on Tuesday with the Nifty below 18,000 mark. HDFC twins were in the red after a stellar run on Monday. This week, Indian investors will closely monitor the outcome of the RBI's monetary policy committee's meeting on Friday, while crude prices and the Russia-Ukraine war continue to remain major headwinds. In Asia, shares were mixed with Japan, South Korea, and Hong Kong stocks trading lower.

Centre may shore up capital at weak state-run banks this fiscal

The government may consider capital support for state-run banks in FY23 based on a fresh assessment by the finance ministry later this year, two officials aware of the matter said, though the Union budget does not envisage any bank recapitalization during the year.

ICICI Securities on HDFC-HDFC Bank merger

The Board of Directors of HDFC Ltd and HDFC Bank, at their respective meetings, inter alia, approved a composite scheme of amalgamation for amalgamation of: (i) HDFC Investments Ltd and HDFC Holdings Ltd, with and into HDFC Ltd; and (ii) HDFC Ltd with and into HDFC Bank, and their respective shareholders and creditors.

Key Highlights

Subsidiary/associates of HDFC Ltd will become subsidiary/associates of HDFC Bank

HDFC Bank will be 100% owned by public shareholders and existing shareholders of HDFC Ltd will own 41% of HDFC Bank

Closing is expected to be achieved within ~18 months, subject to completion of regulatory approvals and other customary closing conditions

Combined balance sheet of | 17.87 lakh crore and | 3.3 lakh crore net worth

HDFC Ltd would benefit from the bank’s lower funding cost

HDFC Bank would gain product expertise in mortgage space and help reduce cost/income ratio

Better cross sell opportunities for bank with direct access to HDFC Ltd’s customer base

The proposed transaction will result in reducing HDFC Bank's proportion of exposure to unsecured loans

Technical & derivatives report by Sameet Chavan, chief analyst-technical and derivatives, Angel One

Yesterday morning, the SGX Nifty was indicating a sluggish start owing to subdued global cues. However, during the pre-opening period, the news came out with respect to the merger of two giant companies, HDFC Ltd and HDFC Bank. This resulted in a complete gush in these two heavyweights and then rub off of this was seen across the broader market. In this process, the key indices, Nifty and Bank Nifty just took off right from the word go. Since the HDFC conglomerate is known for its reputation, this news flow provided the much-needed impetus to the rally. As a result, Nifty zoomed towards 18000 and despite some small profit booking around the mid-session, maintained its sturdy posture throughout the day.

The Nifty is now back above the psychological mark of 18000 and banking was the major charioteer of the move. Although this announcement was a surprise for the participants, the market had given some indication of positivity on Friday and that’s the reason we had stated in our previous comments about the possibility of reaching the 18000 mark this week. This has come much faster than we had anticipated and it's certainly a pleasant development for the bulls. Now, January’s high of 18350 is not so far away, and considering the ongoing momentum, we advise traders to use intra-week decline to add longs.

As far as supports are concerned, 17850 – 17800 is likely to provide an immediate cushion; whereas on the flip side, 18200 – 18350 are the levels to watch out for. On expected lines, banking proved its mettle and is back in the driver’s seat. This is certainly a healthy sign and hence, one should avoid taking contradictory bets at the current juncture. Apart from this, the midcap universe did extremely well which is likely to continue for a while. Traders must try to identify potential movers who are likely to give some quick moves in the coming days.

Gold eases as dollar holds firm on safe-haven flows

Gold inched lower on Tuesday as the U.S. dollar held firm on rising prospects of more Russian sanctions, and bigger interest-rate hikes by the Federal Reserve to rein in inflation.

Markets protected by retail investors: FM

Retail investors have put their faith in the Indian stock market and they are protecting it from volatility due to the fund flows of foreign investors, finance minister Nirmala Sitharaman said.

Oil extends surge on specter of fresh sanctions against Russia

Oil advanced for a second day as the U.S. and Europe prepared to impose a fresh wave of sanctions on Russia for alleged atrocities committed by its forces against civilians in Ukraine.

West Texas Intermediate topped $105 a barrel after closing 4% higher on Monday, the biggest gain in two weeks. Washington will announce additional measures this week, according to National Security Advisor Jake Sullivan, who said these may contain curbs on energy. European policy makers including French President Emmanuel Macron also flagged scope for further steps.

Oil rallied to the highest level since 2008 in the first quarter as Russia’s invasion disrupted supplies in an already tight market faced with roaring demand and dwindling stockpiles. The U.S. and U.K. have already moved to bar Russian oil and there’s gathering momentum for some form of similar action from the European Union, although its dependence on flows is higher.

LME copper firms on Chile supply concerns; strong dollar caps gain

London copper prices rose for a second session on Tuesday, supported by worries about supplies from top producer Chile, although a stronger dollar and lingering concerns over Chinese demand kept gains in check.

Chile's copper production fell 7.5% in February to 394,700 tonnes, the State Chilean Copper Commission (Cochilco) said in a report on Monday.

Stocks waver, crude rises amid tension over Russia

Stocks in Asia were mixed Tuesday and crude oil climbed as investors evaluated the prospect of tougher sanctions against Russia for alleged atrocities during its war in Ukraine.

Shares rose in Australia but retreated in Japan and South Korea, where faster inflation added to the case for more interest-rate hikes. U.S. equity futures dipped after the technology sector bolstered Wall Street on Monday.

Tokyo shares give up gains on profit-taking

Tokyo shares opened higher Tuesday following gains on Wall Street led by tech giants, but soon receded on profit-taking, with investors cautious over uncertainties linked to Ukraine.

The benchmark Nikkei 225 index initially climbed at the open, but dipped 0.11 percent, or 31.91 points, to 27,705.28 in early trade.

The broader Topix index fell 0.26 percent, or 5.08 points, to 1,948.55.

Mizuho Securities said in a note that "buying was likely to dominate today, with equities, particularly high-tech stocks, expected to be buoyed by the rise in the Nasdaq index."

Wall Street up broadly, tech stocks fired up by Twitter rally after Musk purchase

Wall Street's three major equity indexes rose about 1% on the average with shares of Twitter, particularly, outperforming on news that flamboyant tech-entrepreneur and influencer Elon Musk had become the largest shareholder in the microblogging site.

The three indexes - the S&P 500, the Dow Jones Industrial Average and the Nasdaq Composite - also rose broadly for a second day in a row after closing first quarter trading last week with the biggest slump since the coronavirus breakout of two years ago.

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