Budget 2021 boosts financials; ICICI, IndusInd, IDBI Bank jump over 10%

Finance Minster made various announcements including increase in FDI limit in the insurance sector, recapitalisation and privatisation of select PSU banks

Shares of financials including banks, non-banking housing finance companies (NBFCs), housing finance, and insurance companies were in focus on Monday as they surged up to 20 per cent as Finance Minster Nirmala Sithraman, while presenting the Union Budget for financial year 2021-21, made various announcements including increase in foreign direct investment (FDI) limit in the insurance sector, recapitalisation and privatisation of public sector banks (PSBs). That apart, strong Q3 performance of certain individual banks for the quarter ended December 2020 (Q3FY21) also boosted sentiment.

ICICI Bank, IndusInd Bank, Shriram City Union Finance, IDBI Bank, and Bajaj Finserv rallied more than 10 per cent on the National Stock Exchange (NSE). Besides, LIC Housing Finance, State Bank of India (SBI), RBL Bank, AU Small Finance Bank, Bank of India, Housing Development Finance Corporation (HDFC), Bank of Baroda and Aavas Financiers surged between 7 per cent and 10 per cent.

At 02:36 pm, Nifty Bank, Nifty Financial Services, Nifty PSU Bank and Nifty Private Sector Bank indices were up 7 per cent each, as compared to a 4.4 per cent rise in the Nifty50 index.

Among individual stocks, IIFL Finance was locked in the 20 per cent upper circuit band at Rs 176, zooming 44 per cent in the past two trading days, after the company reported a 47 per cent year-on-year (YoY) jump in its consolidated net profit at Rs 268 crore in Q3FY21 driven by loan growth, higher net interest margin and lower cost to income ratio. The company engaged in financial services business had posted a profit of Rs 183 crore in the year-ago quarter.

That apart, shares of ICICI Bank rallied 12 per cent to hit a record high of Rs 602 on the NSE in the intra-day trade today after reporting strong Q3FY21 results, with net profit increasing 19 per cent at Rs 4,940 crore on steady revenue growth. The stock surpassed its previous high of Rs 561, touched on January 13, 2021.

ICICI Bank's loan growth showed a strong revival in both wholesale, small and medium-sized enterprises (SME), and retail, with disbursement in many business segments crossing pre-Covid levels led by festive demand, improving economic outlook, and strong digital eco-system build by the bank across business segments. READ MORE

Moreover, IndusInd Bank rallied 13 per cent to Rs 955 in Monday's session, up 19 per cent in the past two trading days, after the bank posted a decent set of Q3FY21 numbers with a 25 per cent quarter-on-quarter (QoQ) growth in net profit at Rs 830 crore aided by improvement in core operating performance and lower provisions. Net interest income (NII) increased 10.8 per cent YoY and 3.9 per cent QoQ to Rs 3,406 crore. Net interest margin (NIM) stood at 4.12 per cent for the quarter ended December 2020. Net non-performing assets (NPA) improved to 0.22 per cent as at Q3FY21 from 0.52 per cent a quarter ago, well provided for with provision coverage ratio (PCR) at 87 per cent.

In the insurance space, shares of companies engaged in the business rallied by up to 9 per cent on the BSE after the government proposed to increase foreign direct investment in the sector to 74 per cent, a move aimed at attracting overseas players. READ MORE

Lastly, housing financiers including HDFC, M&M Finance, and LIC Housing jumped up to 12 per cent on the BSE after the Union Budget of 2021-22 proposed to extend the Rs 1.5 lakh benefit on interest paid on affordable housing loans by one year to March 31, 2022. Last year this was extended by a year to March 2021 from March 2020 earlier. READ MORE