HDFC-HDFC bank merger supports D-Street: Sensex and Nifty50 jump above 2%

Frontline indexes jumped more than 2 percent on Monday as the announcement of a plan to integrate HDFC into HDFC Bank sent its shares soaring. Sensex and Nifty50 regained the 60,000 and 18,000 levels for the first time since January 18.

The Sensex ended the session at 6,0611.7 points, after gains of 1,335 points, or 2.3 percent – mostly since March 9. The Nifty50 index added 383 points, or 2.2 percent, to end at 18,053 points. HDFC and HDFC Bank rose more than 9 percent each and accounted for more than two-thirds of the gains in both indices.



While the HDFC twin accounted for the bulk of the gains, the overall market sentiment was buoyant.

We have witnessed a series of acquisitions in the last six months by some of the smartest capital professionals in India. Saurabh Mukherjea, founder of Marcellus Investment Managers, said they are all sending a message that now is the time to acquire well-managed companies with reasonable valuations, and reap the full benefits of the economic recovery.

“The economic recovery continues to progress, and we have the GST and corporate earnings data sets to ensure that. All of this suggests that a fairly robust economic recovery is underway. India’s smart capital allocators understand the need for consolidation to make the most of the recovery.”

Market breadth was strong, with only two components of Sensex and three components of Nifty ending up with losses. Overall, 2,647 shares rose while only 877 fell, thanks to strong buying by both local and foreign investors.

Overseas funds extended their latest buying streak, pumping Rs 1,152 crore on Monday, while domestic funds raised Rs 1,675 crore. Global signals were positive amid China’s move to ease its row with the United States. Brent crude settled at around $106 a barrel as traders weighed demand expectations after the COVID surge in China.

US Treasury yields rose ahead of the release of the minutes of this week’s Federal Reserve meeting. The Fed minutes are likely to give some guidance as to whether the US central bank is heading to raise interest rates by half a percentage point in May, and how the central bank will trim its balance sheet.

“Bond yields keep going up, so we can see people jumping into bonds. In the short term, people can hold on to stocks. Once the slowdown happens, they will go back to bonds. Earnings will be affected across the board because Avendus Capital Alternate Strategies CEO Andrew Holland said , supply constraints and rising costs of raw materials. This has been exacerbated by the lockdowns in China and the expanding conflict in Ukraine. But the market at the moment has liquidity.”

From this year’s low of 52,843 on March 7, the Sensex is now up 14.7 percent. India is one of the top performing major markets globally this year.


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