HDFC-HDFC Bank merger powers D-Street: Sensex, Nifty50 jump over 2%

The frontline indices jumped more than 2 per cent on Monday as the announcement of the plan to merge HDFC into HDFC Bank set their stocks soaring. The Sensex and the Nifty50 reclaimed the 60,000 and 18,000 levels for the first time since January 18.
 
The Sensex ended the session at 60,611.7, following a gain of 1,335 points or 2.3 per cent — most since March 9. The Nifty50 index added 383 points, or 2.2 per cent, to end at 18,053. HDFC and HDFC Bank surged more than 9 per cent each and accounted for over two-thirds of the gains in both indices.
 
While the HDFC twins accounted for the bulk of the gains, the overall market mood was buoyant.
 
“We have seen a series of acquisitions in the past six months by some of India’s smartest capital allocators. They are all sending a message that this is a good time to acquire well-run companies with reasonable valuations, and reap the full benefit of the economic upturn, said Saurabh Mukherjea, founder, Marcellus Investment Managers.
 
“The economic recovery continues to progress, and we have the GST collections and corporate earnings data to vouch for that. All of this suggests that a fairly robust economic recovery is underway. India’s smart capital allocators understand the need to consolidate to make the most of recovery,” he added.
 
The market breadth was strong, with only two Sensex and three Nifty components ending with losses. Overall, 2,647 stocks advanced and only 877 declined, thanks to robust buying by both domestic and foreign investors.
 
Overseas funds extended their recent buying streak, pumping in Rs 1,152 crore on Monday, while domestic funds raked in Rs 1,675 crore. Global cues were positive amid China’s move to ease a dispute with the US. The Brent crude held steady at around $106 per barrel as traders weighed the outlook for demand after the Covid surge in China.
 
US Treasury yields went up ahead of the release of Fed minutes this week. Fed minutes are likely to give some direction regarding whether the US central bank is going for a half percentage-point rate increase in May, and how the central bank will shrink its balance sheet.
 
"Bond yields continue to rise, so we can see people jumping into bonds. In the short term, people can stick to equities. As soon as the slowdown happens, they will go back to bonds. Earnings will take a hit across the board because of supply constraints and rising raw material costs. And this has been exacerbated by lockdowns in China and extension of the conflict in Ukraine. But the market at the moment has got liquidity," said Andrew Holland, CEO of Avendus Capital Alternate Strategies.
 
From this year’s low of 52,843 on March 7, the Sensex has now rallied 14.7 per cent. India is one of the best-performing major markets globally this year.