HDFC twins, economic data lifts markets, Sensex gains over 2,000 points

Sharp gains posted by the HDFC twins and positive economic data helped the markets gain for a fourth consecutive day on Wednesday ahead of the Reserve Bank of India’s policy decision.

The benchmark Sensex rose 583 points, or 1 per cent, to end the sessions at 59,689. The 30-share index has now gained 2,075 points, or 3.6 per cent, in the last four trading sessions. The Nifty50 index, on the other hand, settled at 17,557 with a gain of 159 points, or 0.9 per cent.

HDFC Bank and HDFC Ltd rose 2.7 per cent and 3 per cent respectively, accounting for half of the gains made by the Sensex. HDFC Bank on Wednesday reported healthy deposit and loan growth in the March 2023 quarter.

“Incremental deposits raised in FY23 of Rs 3.2 trillion were 45 per cent higher than the Rs 2.2 trillion raised in FY22, which is a commendable achievement in our view,” Suresh Ganapathy, head of financial research, Macquarie Capital, said in a note. “For a Rs 4 trillion deposit mobilisation target in FY24, HDFC Bank needs to achieve Rs 25 per cent YoY growth in incremental deposits, which is achievable.”

Some buying was also seen due to the moderating valuations. At present, the Nifty is trading at a trailing twelve-month (TTM) price-to-earnings (P/E) multiple of 21.1, as against a five-year average of 25 .

The expansion of India’s services sector for the 20th straight month further boosted sentiment.

After being net sellers for the first two months of the year, foreign portfolio investors (FPIs) have been net buyers partly on the back of share sales by some big companies and partly due to improving global sentiment amid hopes that the banking crisis has been contained. So far this month, FPIs have been net buyers to the tune of nearly Rs 3,000 crore.

However, global markets traded mixed on Wednesday as hawkish messages from the New Zealand and Australian central banks revived fears of rate hikes and slowdown.

“The domestic market is displaying resilience, unaffected by the weaker global peers, thanks to strong banks and NBFCs’ quarterly numbers and the windfall tax cut. The RBI is expected to announce a 25-basis point rate hike in its policy announcement on Thursday before taking a pause, a positive for the market,” said Vinod Nair, head of research at Geojit Financial Services.

The market breadth has been strong with 2,556 stocks gaining and 992 stocks declining. More than two-thirds of the Sensex stocks gained. Apart from the HDFC twins, L&T, ITC and Infosys were the big contributors to the index’s gains.

“While the trend looks positive, the upside could be limited, given a sharp rise of 3 per cent in the Nifty in the last four days and the big event of RBI policy outcome on Thursday. After a long period, midcaps have shown momentum and hence action could be seen in the broader markets,” said Siddhartha Khemka, head of retail research at MOSL Financial Services.