ETMarkets morning podcast: HDFC Bank stock may just have had a shot in the arm

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Hi hello. Welcome to ETMarkets Morning, the money, business and markets show. I am Nikhil Agarwal. Let’s start with the headlines first.

– Tata breaks HAL monopoly with first military aircraft contract
– RBI removes PCA restrictions on UCO Bank
– India’s economy picks up speed after second wave of coronavirus, S&P says
– Center wants PSU control of Petronet, IGL remains after BPCL open offer

Now let me give you a quick overview of the state of the markets.

Dalal Street is expected to have a positive start this morning. The crafty futures on the Singapore Stock Exchange traded 50 points lower at 8:20 a.m. (IST). Asian markets opened lower Thursday as Wall Street falls weighed on the market, with investors adjusting their positions ahead of futures and options settlement this week. The largest MSCI index of Asia-Pacific stocks outside of Japan fell 0.99%.

Elsewhere, the yield on 10-year Treasuries was 1.34%. The dollar was supported on Thursday by cautious risk sentiment stemming in part from concerns over the Delta variant as the euro looked into the European Central Bank’s policy decision later in the day. Oil prices fell on Thursday, abandoning some of the gains from the last session, although a drop in US production in the Gulf of Mexico following Hurricane Ida provided a bottom under the market. Brent fell 18 cents, or 0.25%, to $ 72.42 a barrel.

That said, here’s what’s in the news.

Foreign investor interest in HDFC Bank is expected to pick up after the country’s largest private lender is dropped from the red flag list of foreign portfolio investors, analysts said. A red flag is a warning sign that the REIT’s stake in a particular company may soon hit the upper limit. A stock would be on the red flag list when REIT holdings are below or below 3% of the allowed limit for the sector. A headline coming off the red flag list indicates that foreign investors have reduced their holdings in recent times. For a private bank, the maximum allowed limit of the REIT is 74%.

The life of non-bank financial corporations (NBFC) is gradually returning to normal after three years of struggle. Faced with signs of easing financial markets for shadow banks that were shut out after the IL&FS collapse in 2018, companies are raising funds through the public sale of bonds at interest rates below what they were paying before the implosion. Indiabulls Housing, which seeks to be a loan originator rather than engaging in direct loans, and Edelweiss are in the market by selling bonds to retail investors. Piramal Capital & Housing, Muthoot Finance, Muthoot FinCorp, Indel Money, Power Finance Corporation, Manappuram Finance and JM Financial are expected to raise at least Rs 10,000 crore in total by December.

Equity assets under management (AUM) of foreign portfolio investors (REITs) reached a record high of $ 651 billion (Rs 48 lakh crore) at the end of August 2021, according to NSDL data. It increased by $ 255 billion (Rs 18 lakh crore) from the period last year as part of a rebound in the domestic stock market and a sustained influx over the past 12 months. REITs accounted for nearly a fifth of India’s market capitalization of over $ 3.5 trillion in August. Banking and financial sector stocks accounted for the largest share (31.8%) in the REIT portfolio, followed by IT and energy (14.6% and 10% respectively).

RECENTLY,
Flows to equity mutual funds fell sharply in August compared to the previous month as investors made new allocations to a new fund offering (NFO) from the SBI Balanced Advantage Fund, which invests in a combination of ‘stocks and debts. Equity mutual funds recorded inflows of Rs 8,667 crore in August, significantly lower than the previous month’s inflows of Rs 22,584 crore. The rise in equities saw the industry’s total assets under management in August soar to Rs 36.09 lakh crore from Rs 35.15 lakh crore the previous month. Investors continued to invest through Systematic Investment Plans (SIPs) with such collections touching Rs 9,923 crore, Rs 314 crore more than the previous month.

NOW Before you go, here’s a look at the actions buzzing this morning …

The Reserve Bank of India lifted restrictions on state-owned UCO bank after improving its finances and the bank’s cautiousness.

IDBI Bank has recouped nearly 250 crore rupees from its outstanding loans to the Videocon group by selling an overseas property held as collateral by the bankrupt conglomerate.

The government can ask the public promoters of IGL and Petronet LNG to make open offers to minority shareholders of these
companies in concert or in competition with the strategic buyer of BPCL to ensure that SOEs do not lose control of gas companies.

The Canada Pension Plan Investment Board (CPPIB) to sell a 2% stake in SBI Life Insurance Company worth Rs 2,274 crore through the
market platform Thursday, according to a term sheet issued by the sole bookrunner of the BNP Paribas transaction.

Also check out over two dozen stock recommendations for today’s trade from top analysts on ETMarkets.com.

That’s all for the moment. Stay with us for all the market news throughout the day. Good investment!

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