Strong gains led by banking and financial heavyweights lifted equity benchmarks the Sensex and the Nifty more than 2 percent higher each on April 4 as investor sentiment was boosted by the HDFC-HDFC Bank merger announcement.
HDFC, which is India’s largest housing finance company with a total market cap (m-cap) of ₹4.9 lakh crore (on April 4 closing) will merge into HDFC Bank, India's largest private sector bank by assets with a market cap of nearly ₹9.2 lakh crore.
HDFC made the announcement regarding the merger early in the morning which boosted the market sentiment, making Sensex open 487 points higher. The index remained in the green throughout the session, rising as much as 1568 points in intraday trade.
The 30-share pack, however, cooled off slightly and closed 1335 points, or 2.25 percent, up at 60,611.74. Nifty ended the day at 18,053.40, up 383 points, or 2.17 percent. With this, the market extended the gains into the second consecutive session.
Only the stocks of Infosys (down 1.05 percent) and Titan (down 0.20 percent) ended in the red in the Sensex index.
Shares of HDFC Bank surged 9.97 percent while those of HDFC jumped 9.30 percent, emerging as the top two gainers in the Sensex kitty of stocks.
"Domestic market was lifted by the announcement of HDFC bank and HDFC merger, improving sentiments of the stock market and financial sector. The upcoming focus of the market will be on earnings reports and the RBI meeting this week. Q4 results will have a decent start supported by the IT sector while RBI is expected to hold the rates with an accommodative policy," said Vinod Nair, Head of Research at Geojit Financial Services.
Global sentiment remained weak amid reports of war crimes committed by Russia and anticipations of more sanctions against it. Besides, talks over recession have started gaining momentum as the US money market is witnessing a strong inflow. Investors fear Federal Reserve's aggressive stance on rate hikes could hit the economy and result in recession.
Crude oil prices eased and traded near $105 a barrel. The rupee strengthened further against the dollar. The rupee closed 24 paise higher at 75.55 against the dollar on April 4.
Following the benchmarks, the mid and smallcap indices also rose. The BSE Midcap index closed 1.27 percent higher while the BSE Smallcap index rose 1.68 percent.
Nifty Bank index jumped 4 percent with only shares of Bandhan Bank (down 0.41 percent) in the red. Nifty Private Bank index clocked a gain of 3.92 percent and the PSU Bank index rose 0.96 percent.
The overall market capitalisation of BSE-listed firms jumped to ₹272.4 lakh crore from ₹267.9 lakh crore in the previous session on April 1, making investors richer by ₹4.5 lakh crore in a single day.
As many as 179 stocks, including Power Grid, Adani Enterprises, Adani Green Energy, Adani Power, Jindal Steel, Vedanta and Raymond, hit their fresh 52-week highs in intraday trade on BSE.
"Key indices quickly rebounded and clung on to the key psychological levels of 60,000 and 18,000 respectively. The trigger was that the markets gave thumbs up to the HDFC merger announcement and the rally in both the stocks spread to other financial stocks and also had a rub-off effect on other sectoral stocks," said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.
"Also, recent key economic indicators such as core growth numbers and all-time high GST collections showed that the domestic economy has shrugged off geopolitical tensions. On daily charts, the Nifty is holding an uptrend formation but due to overbought texture, traders may prefer to book some profit at higher levels," Chouhan added.
"For the trend following traders, 17,880 would act as a crucial support level, and above the same, the index may touch the level of 18,150-18,200. On the flip side, a quick intraday correction is not ruled out if the index trades below 17,880 and below the same, it could retest the level of 17,790-17,750,” Chouhan said.
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