It was a sort of Black Monday as market cap of Rs.216,000 crore evaporated with the Sensex losing 871 points in a single day. The Sensex was down nearly 1300 points at one time but recovered in late trades. The advance decline ration was unfavourable at 5:25 on the Sensex. There were deep cuts in stocks like Bajaj Finance, IndusInd Bank and State Bank of India ahead of the Monetary Policy announcement on 07 April. However, IT stocks gained with HCL Tech leading the rally. Global cues were largely stable.
The advances portfolio of HDFC Bank is reported to have grown by 14% yoy to Rs.11,32,000 crore as of end of March 2021. On a sequential QOQ basis, loan book grew 4.6%. Interestingly, the growth in the quarter was driven by wholesale loans clocking 21% growth and retail loans growing by just 7.5% on a yoy basis. For the Mar-21 quarter, deposits grew 16.3% at Rs.13,35,000 crore with the CASA ratio growing from 42.1% to 46% on a yoy basis. The bank bought loans worth Rs.75,000 crore from HDFC.
Byju’s, which is already valued at close to $15 billion, closed the acquisition of Aakash Educational Services for $1 billion. Akash is a leader in test-prep services and the deal was compensated with a mix of cash and stock. Byju’s is betting heavily on the hybrid education model and the purchase of Aakash will help Byju’s combine the best of offline and online. While Byju’s brings content and tech capabilities, Aakash brings its pedagogy expertise in the test-prep segment. Aakash has a 33-year pedigree in the field.
Infosys market cap crossed the Rs.600,000 crore for the first time and ironically on a day when the Sensex had tanked 871 points. Infosys has consistently outperformed the Sensex growing 120% in the last 1 year as compared to 63.5% on the Sensex. Under the new leadership, Infosys has focused on large deals and on improving operating margins. That has worked and the markets are delighted. Also, the focus on digital technologies has paid rich dividends. Infosys will announce Q4 results on 14 April.
Responding to the government decision to charge higher profit share on the Barmer oilfield, Vedanta emphasised that in FY20 alone the company had contributed Rs.34,000 crore to the government by way of oil royalties as well as direct and indirect taxes. Vedanta also underlined that it had contributed a total of Rs.339,000 crore to the Indian government revenues over the last 7 years, which was nearly 40% of its total turnover. Vedanta wants the Barmer contract to be extended on the same 1995 terms.
Foreign direct investment inflows into India in the equity form was up 28% at $54.18 billion in the Apr-Jan period. If the reinvested earnings were also considered, then 10-month FDI was up 15% at $72 billion. One reason for this spurt has been the FDI policy reforms, investment facilitation and the focus on ease of doing business. The government confirmed that this was the highest ever FDI received by India in the first 10 months of any fiscal. Computer software and hardware accounted for 45.8% of flows.
India PMI manufacturing for Mar-21 fell to a 7-month low of 55.4. The figure was at 57.5 in Feb-21. This weakness was triggered by renewed lockdowns due to resurgence in COVID-19 cases forcing businesses to cut headcount once again. However, staying above 50 means that PMI is still expansionary, although the momentum may be faltering. There was a negative impact on domestic orders and output, but foreign orders showed some traction. However, layoffs were at a 6-month high in the month of March.
The latest trend is that gold loan companies are cutting tenors and seeking additional collateral in the light of the sharp fall in the price of gold. Industry leader, Muthoot Finance, offers discounts and incentives to borrowers for early payments. The average tenor has been cut from 270 days to 90 days. Also, gold loans are being disbursed at 75% of LTV as compared to 90% of LTV in the past. Gold prices fell 9% in the Mar-21 quarter, the first quarterly fall in 2 years. Bloomberg expects greater consolidation in the business.