Terrific Tuesday

Nifty50: 17,486 ▲ 175 (+1.0%)
Sensex: 58,960 ▲ 549 (+0.9%)

Hello, folks!

Markets may not have been breaking records, but people around the world are busy making records. Ingar Valentyn, a South African woman, has set the world record for making a whopping 249 cups of tea in an hour. Now, we wonder who is going to make a world record for drinking most cups of tea in an hour!

• Following strong global cues, Indian markets rose for the third consecutive session.
• In all, 39 of the Nifty50 stocks closed in the green.
• US industrial production for September rose 0.4% month-on-month, exceeding expectations of a 0.1% gain.

All the Nifty sectoral indices closed in the green. Strong gains were seen in PSU Bank (+3.9%) and Media (+2.1%).

What’s trending

⭐ Tata Comm reports robust results 

TATACOMM (NSE): 1,239 ▲ 43 (+3.6%)

Tata Communications reported a 6.2% year-on-year rise in consolidated revenue to ₹4,431 crore during the September quarter. Meanwhile, its net profit grew by 25.1% YoY to ₹532 crore. Its data service business witnessed strong momentum, recording a rise of 11.2% YoY to ₹3,493 crore.

⭐ Suzlon bags new order

SUZLON (NSE): 7.7 ▲ 0.2 (+3.3%)

Shares of Suzlon Energy rose by over 6% after the company secured a new order from Adani Green Energy for a 48.3 MW wind power project. As part of the order, Suzlon will install 23 wind turbine generators in Gujarat, which are expected to be commissioned in 2023.

⭐ Can Fin Homes’ profit jumps

CANFINHOME (NSE): 522 ▲ 20 (+4.1%)

Housing finance company Can Fin Homes reported a jump of 14% year-on-year (YoY) in its Q2 net profit at ₹141 crore. Meanwhile, revenue from operations rose by 40% YoY to ₹657 crore. The company’s net interest income rose 31% YoY to ₹251 crore, while its outstanding loan book grew 22% YoY to ₹28,823 crore.

⭐ V-Mart to acquire LimeRoad

VMART (NSE): 2,784 ▲35 (+1.2%)

Fashion retailer V-Mart Retail has signed an agreement to acquire online fashion platform LimeRoad. V-Mart Retail will pay ₹31 crore in cash and assume liabilities of ₹36 crore. Further, V-Mart plans to invest ₹150 crore to enable LimeRoad achieve sustained profitability. As per the management, the deal will help V-Mart expand its omni-channel presence.

In Focus

Domino effect of the HDFC merger

The proposed merger of HDFC Bank and HDFC Ltd could be completed by Q1FY24. After the merger, HDFC Ltd will cease to exist and will be fully absorbed into HDFC Bank. However, HDFC Ltd could get excluded from the Nifty50 as early as Q3FY23. How will this impact you as an investor? Let's find out.

In less than six months since the announcement in April 2022, HDFC Bank has managed to secure most of the approvals for the merger. The company has now called a meeting on 25 November for the final shareholder approval. Experts believe a shareholder approval for the merger might lead to the exclusion of HDFC from the Nifty50 index by December or January.

As per market estimates, this could trigger an outflow of up to $1.5 billion from HDFC shares through passive funds tracking the Nifty50. In fact, HDFC was among the top losers on Tuesday, despite a rise in the overall market. 

HDFC carries a weightage of 5.48% in Nifty index. Upon its exclusion, this weightage will be redistributed among the top 10 Nifty stocks as per their free-float market capitalisation. Hence, the weightage of the existing Nifty50 stocks will rise.

Meanwhile, a new stock will make its way into the Nifty50 as a replacement, which would get fresh inflow of up to $140 million based on a Nifty weightage of 0.45-0.50%. 

Considering these changes, the market might see increased volatility in the days ahead. Hence, investors should brace for the same.

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Good to know

What are non-performing assets?

A non-performing asset (NPA) is a loan on which principal or interest have not been paid by the borrower in the last 90 days. Banks and NBFCs have to set aside money for loans that have defaulted or are on the verge of defaulting. This is called provisioning for bad loans or non-performing assets. The rise in provisioning affects financial institutions’ profits. Investors must always keep an eye on whether financial institutions have enough capital to cover for a rise in bad loans.

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