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Today on Market Ahead: 1. Bandhan Bank buys Gruh Finance; promoter stake in bank to reduce to 61% 2. S&P removes IDBI Bank ratings from CreditWatch post LIC's capital infusion 3. Global cues, oil prices likely to impact sentiments; RBI guv meeting with NBFCs eyed
Positive Asian cues, ongoing round of trade talks between the US and China, movement in oil prices are likely to impact investors' sentiment heading into trade on Tuesday. That apart, market participants will watch out for RBI Governor's meeting with the representatives of Non-Banking Financial Companies (NBFCs) later in the day to discuss the liquidity issues.
Nifty futures on the Singapore Exchange (SGX) was trading at 10,798.50 levels, down 6.50 points or 0.06 per cent in early trade.
Asian shares rose for the third straight session on Tuesday as investors bet that Washington and Beijing are inching toward a trade deal and that U.S. Federal Reserve would halt its tightening if economic growth slows further.
Japan's Nikkei rose 1.0 per cent while MSCI's broadest index of Asia-Pacific shares outside Japan ticked up 0.1 per cent.
In overnight market action on Wall Street,the Dow Jones Industrial Average closed 0.42 per cent up at 23,531.35 points, while the S&P 500 gained 0.7 per cent to 2,549.69. The Nasdaq Composite added 1.26 per cent to 6,823.47.
Oil prices edged up on Tuesday, supported by hopes that US-Chinese talks in Beijing would bring a halt to a trade dispute between the world’s biggest economies, while the start of OPEC-led supply cuts also tightened markets.
Among individual stocks, Gruh Finance and Bandhan Bank will be in focus today. Gruh Finance, the HDFC group’s affordable housing finance arm, will merge with Kolkata-based Bandhan Bank, helping the latter’s promoters to reduce stake in tune with regulatory norms.
The proposed merger will also avoid a potential conflict of interest for HDFC to grow its affordable housing loan portfolio.
Under the proposed merger, 568 equity shares (of face value Rs 10 each) of Bandhan Bank will be issued for every 1,000 equity shares of Gruh (with face value Rs 2 each). The shares of both the companies closed lower. Bandhan Bank’s stock was down 5.2 per cent at Rs 501 per share; Gruh Finance’s share also dipped 3.86 per cent to Rs 306 per share. The combined market capitalisation of Bandhan Bank and Gruh is Rs 82,207 crore.
Also, the shares of Tata Elxsi will be in focus as company is slated to announce its December quarter results later in the day.
Global Rating agency Standard and Poor's ( S&P) on Monday said the strain on IDBI Bank to meet regulatory capital requirement has eased after Life Insurance Corporation of India infused Rs 14,500 crore as fresh capital in ailing Indian banking entity.
"We are affirming our 'BB/B' foreign currency issuer credit ratings on the bank, and the 'BB' long-term issue rating on the notes issued by the bank's Dubai branch. We are removing the ratings from CreditWatch, where they were placed with negative implications on August 17, 2018," S&P said in a statement.
This capital infusion is part payment for LIC's proposed acquisition of a 51 per cent controlling stake in the bank. It will help IDBI Bank meet its regulatory requirement. The bank's capital ratios have been below the regulatory minimum requirements since June 2018