HDFC Bank gains after announcing opening of QIP and ADR issues

After moving in a narrow range in early afternoon trade, key benchmark indices extended gains in afternoon trade. The market breadth indicating the overall health of the market was negative. The Sensex was currently trading above the psychological 29,000 level, having alternately moved above and below that mark so far during the trading session. The Sensex had fallen below the psychological 29,000 level after yesterday's slide. The Sensex was currently up 172.14 points or 0.6% at 29,055.25. Brent crude oil futures edged lower, adding to big losses registered during the previous session triggered by a weekly oil inventory report showing increase in oil inventories in the United States.

Reserve Bank of India (RBI) Governor Raghuram Rajan said in an interview to a newspaper published today, 5 February 2015, that the RBI still has a way to go in fighting inflation and it is important that the central bank has the credibility to bring down inflation if it picks up.

Bank stocks were mixed. HDFC Bank advanced after the bank announced the opening of the issue of shares to qualified institutional investors and also the issue of shares through American Depository Receipts (ADRs). Shares of public sector oil marketing companies (PSU OMCs) gained as crude oil prices extended a sharp slide registered during the preceding trading session. FMCG stocks rose on renewed buying. Godrej Consumer Products gained after declaring good Q3 result.

Foreign portfolio investors sold shares worth a net Rs 83.80 crore yesterday, 4 February 2015, as per provisional data.

In the overseas markets, Asian stock markets edged lower after the European Central Bank (ECB) yesterday, 4 February 2015, abruptly pulled back its soft treatment of Greek debt and cancelled its acceptance of the country's bonds in return for funding. Most US stocks dropped yesterday, 4 February 2015, after the ECB pulled back its soft treatment of Greek debt and cancelled its acceptance of the country's bonds in return for funding.

In the foreign exchange market, the rupee edged lower against the dollar.

Brent crude oil futures edged lower, adding to big losses registered during the previous session triggered by a weekly oil inventory report showing increase in oil inventories in the United States. Decline in global crude oil prices augurs well for India. Deregulation of diesel price announced by the Indian government in October 2014 and a sharp decline in global crude oil prices over the past few months will help reduce the government's fuel subsidy burden and help contain its fiscal deficit. The steep slide in global crude oil prices will also help India in containing its current account deficit and fuel price inflation. India imports 80% of its crude oil requirement. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports.

At 13:15 IST, the S&P BSE Sensex was up 172.14 points or 0.6% at 29,055.25. The index jumped 172.14 points at the day's high of 29,055.25 in afternoon trade. The index fell 58.23 points at the day's low of 28,824.88 in early trade.

The CNX Nifty was up 36.40 points or 0.42% at 8,760.10. The index hit a high of 8,768.30 in intraday trade. The index hit a low of 8,705.05 in intraday trade.

The BSE Mid-Cap index was up 14.03 points or 0.13% at 10,755.41. The BSE Small-Cap index was down 10.85 points or 0.09% at 11,421.55. Both these indices underperformed the Sensex.

The market breadth indicating the overall health of the market was negative. On BSE, 1,333 shares declined and 1,278 shares advanced. A total of 126 shares were unchanged.

Bank stocks were mixed. Among private bank stocks, IndusInd Bank (down 0.04%), ING Vysya Bank (down 0.06%) and ICICI Bank (down 1.16%) declined. Kotak Mahindra Bank (up 0.27%), Axis Bank (up 2.46%) and Yes Bank (up 2.14%) rose.

HDFC Bank advanced after the bank announced the opening of the issue of shares to qualified institutional investors and also the issue of shares through American Depository Receipts (ADRs). The stock was up 1.31% at Rs 1,081.30. The stock hit high of Rs 1,092 and low of Rs 1,070.25 so far during the day. HDFC Bank today, 5 February 2015, said that the bank is raising funds through a combination of share sales to qualified institutional investors and the issue of American Depository Receipts (ADRs). A special committee for the bank has approved raising upto Rs 2000 crore through issue of equity shares to qualified institutional investors. The bank will raise upto Rs 8500 crore through issue of American Depository Receipts (ADRs). The floor price for QIP issue and the ADR issue is fixed at Rs 1,061.84 per equity share.

Among PSU bank stocks, Bank of Baroda (down 2.11%), Canara Bank (down 3.54%), Bank of India (down 0.33%) and Union Bank of India (down 0.55%) dropped. State Bank of India (SBI) (up 0.63%) and Punjab National Bank (up 0.59%) rose.

Allahabad Bank rose 0.99%. Allahabad Bank's net profit fell 49.56% to Rs 164.11 crore 1.51% increase in total income to Rs 5386.79 crore in Q3 December 2014 over Q3 December 2013. The result was announced during trading hours today, 5 February 2015.

Allahabad Bank's ratio of net non-performing assets (NPAs) to net advances stood at 3.89% as on 31 December 2014, compared with 3.54% as on 30 September 2014 and 4.19% as on 31 December 2013.

The bank's ratio of gross NPAs to gross advances stood at 5.46% as on 31 December 2014, compared with 5.36% as on 30 September 2014 and 5.47% as on 31 December 2013.

Provisions and contingencies rose 15.58% to Rs 643.66 crore in Q3 December 2014 over Q3 December 2013. The provisioning coverage ratio as on 31 December 2014 stood at 52.05%.

The bank's Capital Adequacy Ratio (CAR) as per Basel III norms stood at 10.02% as on 31 December 2014, compared with 9.99% as on 30 September 2014 and 10.46% as on 31 December 2013.

Shares of public sector oil marketing companies (PSU OMCs) gained as crude oil prices extended a sharp slide registered during the preceding trading session. BPCL (up 6.29%), HPCL (up 3.74%), and Indian Oil Corporation (up 2.46%) edged higher.

Decline in crude oil prices could reduce under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at government controlled prices. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports. The government has already decontrolled pricing of petrol and diesel.

Meanwhile, Prime Minister Narendra Modi has expressed joy over registration of 10 crore citizens as a part of the PAHAL (Pratyaksha Hastaantarit Laabh) Yojana -- the direct benefit transfer scheme for LPG subsidy. PAHAL Yojana will bring an end to black-marketeering and subsidy will reach people more effectively, the Prime Minister said today, 5 February 2015.

Shares of state-run gas transmission and distribution firm GAIL (India) were off 2.18%. GAIL (India) bears a part of the subsidy burden of PSU OMCs on sale of LPG.

FMCG stocks rose on renewed buying. Colgate-Palmolive (India) (up 1.53%), Hindustan Unilever (up 0.76%), Britannia Industries (up 0.14%), Dabur India (up 0.13%), Marico (up 0.25%), Nestle India (up 0.31%) gained.

Godrej Consumer Products gained 2.92%. On a consolidated basis, the company reported 34.63% rise in net profit to Rs 263.57 crore on 12.41% rise in total income to Rs 2247.78 crore in Q3 December 2014 over Q3 December 2013. The result was announced during market hours today, 5 February 2015. EBITDA rose 27% to Rs 398 crore in Q3 December 2014 over Q3 December 2013. EBITDA margin improved 210 basis points to 17.9% in Q3 December 2014 from 15.8% in Q3 December 2013.

Realty stocks declined. DLF (down 1.41%), Indiabulls Real Estate (down 1.48%), Housing Development and Infrastructure (down 1.88%), D B Realty (down 3.11%), Unitech (down 2.6%), Sobha (down 1.01%), Oberoi Realty (down 0.06%) declined. Godrej Properties rose 2%.

Bharat Heavy Electricals (Bhel) fell 1.44%. Bhel during market hours today, 5 February 2015, said that the company has successfully commissioned a 270 megawatt (MW) coal based thermal power plant in Maharashtra. The unit was commissioned at RattanIndia Power's (formerly Indiabulls Power) upcoming thermal power project located at village Nandgaonpeth in Amravati district of Maharashtra. This is the third 270 MW unit commissioned by Bhel in Phase-1 of the project.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 61.795, compared with its close of 61.7525 during the previous trading session.

Brent crude oil futures edged lower, adding to big losses registered during the previous session triggered by a weekly oil inventory report showing increase in oil inventories in the United States. Brent for March settlement was off 76 cents at $53.40 a barrel. The contract had slumped $3.75 a barrel or 6.47% to settle at $54.16 a barrel during the previous trading session.

Reserve Bank of India (RBI) Governor Raghuram Rajan said in an interview to a newspaper published today, 5 February 2015, that the RBI still has a way to go in fighting inflation and it is important that the central bank has the credibility to bring down inflation if it picks up. India has to ensure that if there are supply shocks in future, they don't increase inflationary expectations, Rajan said. Rajan also stressed on the need for the country to accelerate growth, saying India should not settle for anything less than double-digit growth in the medium term. The RBI left its benchmark lending rate viz. the repo rate unchanged at 7.75% after a monetary policy review early this week, as the central bank awaits further evidence to gauge whether the disinflationary process is continuing. Earlier, the RBI had surprised financial markets by announcing a cut in the repo rate by 25 basis points in an unscheduled monetary policy review on 15 January 2015, citing easing of inflationary pressures in the economy.

Asian stock markets edged lower today, 5 February 2015, after the European Central Bank (ECB) yesterday, 4 February 2015, abruptly pulled back its soft treatment of Greek debt and cancelled its acceptance of the country's bonds in return for funding. Key indices in Japan, Taiwan, Singapore, South Korea, and Indonesia were off 0.02% to 1.18%. In Hong Kong, the Hang Seng index was up 0.14%.

In China, the Shanghai Composite was off 1.18%. The People's Bank of China (PBOC) yesterday, 4 February 2015, cut its reserve-requirement ratio for banks by 0.5 percentage points, in a bid to boost lending to businesses and bolster the economy. The central bank said the ratio for most banks will fall to 19.5% after the cut takes effect.

Trading in US index futures indicated that the Dow may slide 28 points at opening bell today, 5 February 2015. Most US stocks dropped yesterday, 4 February 2015, after the ECB pulled back its soft treatment of Greek debt and cancelled its acceptance of the country's bonds in return for funding.

In Europe, the European Central Bank (ECB) yesterday, 4 February 2015, announced that it will no longer accept Greek government bonds from banks seeking funds, raising costs and volatility for Greece's lenders at a time of growing deposit outflows. It is currently not possible to assume a successful conclusion of Greece's current bailout, the ECB said, just hours after its president, Mario Draghi, met with Greece's new finance minister, Yanis Varoufakis. The announcement marked the first time since 2012when Athens was locked in another round of acrimonious negotiations with its creditorsthat the central bank has suspended its waiver for Greece's junk-rated bonds. Mr. Varoufakis and newly elected Greek Prime Minister Alexis Tsipras have been touring European capitals, promoting a plan to overhaul the country's sagging economy that relies less on budget cuts and seeks easier terms on repaying debts.

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