HDFC Bank loan growth fires stocks
Benchmark indices jumped to near four-month highs on Monday buoyed by HDFC Bank reporting strong growth in loans in the first quarter of the fiscal which rekindled hopes of a quick economic recovery.
The 30-share Sensex, which spurted 640 points in intra-day trade, gave up some of the gains to settle at 36487.28, a rise of 465.86 points, or 1.29 per cent. On the NSE, the broader Nifty soared 156.30 points, or 1.47 per cent, to 10763.65.
The stock surge came ahead of the results season which will kick off this week with Tata Consultancy Services (TCS) declaring its first quarter numbers on Thursday.
Though market circles expect India Inc to report a poor performance during the quarter because of the lockdown, the focus will be on the guidance given by them on a possible recovery from the second half of the fiscal.
Sentiment on Monday was also supported by a positive trend in global markets on hopes of a Covid-19 vaccine, improving global macroeconomic conditions and a recovery in Chinese activity.
Stocks in Shanghai rallied around 6 per cent, Hong Kong 4 per cent, Tokyo and Seoul up to 2 per cent amid heightened expectations of a government stimulus to support economic recovery.
However, what came as a positive surprise to the markets was the news from HDFC Bank.
The private sector bank reported a 21 per cent jump in total advances in the quarter ended June 30 to around Rs 10,04,500 crore compared with Rs 8,29,700 crore as of June 30, 2019 and Rs 9,93,700 crore as of March 31, 2020.
The growth in its loan book came in a period marked by a complete lockdown in April and the partial easing of the restrictions in May and June.
HDFC Bank’s advances had also risen 21 per cent in the fourth quarter of the last fiscal. Its numbers reignited hopes of an economy recovering faster than visible from other high frequency consumption and production data.
It led to the shares of the private sector bank gaining 2.68 per cent to settle at Rs 1,102.95 on the BSE.
Reliance Industries stock continued to witness buying momentum and it ended 3.57 per cent higher at Rs 1,851.40 on the BSE as its market cap crossed the Rs 11.5 lakh crore mark to close at Rs 11,73,677.35 crore.
“Global cues were supportive as positive data surprises and encouraging preliminary data for some vaccine candidates boosted hopes that the global economy will bounce back from an expected recession this year,” according to Siddhartha Khemka of Motilal Oswal.
“On the domestic side, strong loan growth numbers from HDFC Bank and initial signs of the easing in tensions between India and China boosted investor sentiment,’’ he said.
He, however, added that despite the near-term momentum being positive, traders should be stock specific and look at booking profits at regular intervals. Investors should also keep a watch on the first- quarter earnings season.
At the inter-bank forex markets, the rupee pared initial gains to settle lower by two paise at 74.68 against the dollar because of rising crude oil prices and dollar buying by importers.
While the gains in stock prices supported the currency in the beginning, the movement in crude oil prices saw the currency ending marginally lower.
In a highly volatile session, the rupee opened at 74.53 against the dollar and touched an intra-day high of 74.52 and a low of 74.82. It finally closed at 74.68 against the dollar, down 2 paise over its previous close of 74.66 on Friday.