Market extends rally

Nifty50: 18,165 ▲ 112 (+0.6%)
Sensex: 61,045 ▲ 390 (+0.6%)

Hi, there!

As per reports, Twitter via an auction house started a fire sale of items from the company’s  San Francisco headquarters on Tuesday. 

Items on auction include whiteboards, desks, chairs, coffee machines, iMacs, stationary bike stations and even boxes of KN95 masks!

Company memorabilia like a large Twitter bird statue and an "@" symbol sculpture planter are also up for grabs and are reportedly fetching high bidding amounts. 

While the company and auction house did not disclose the reasons behind the fire sale, speculation is rife that this is not just a ‘Marie Kondo’ moment. News outlets have reported earlier about Musk going on a cost-cutting spree and even failing to meet lease payments for a Twitter office. 

No money struggles in the markets today though as bulls powered through before the closing bell. Here's a lowdown.

• Nifty50 rallies for second consecutive day, gaining 1.1% so far this week.
• 35 stocks from the Nifty50 universe ended in the green.
• UK’s inflation fell to 10.5% from 10.7% in December, lowest in last three months.

Among the Nifty sectoral indices, Metal (+1.6%) and Pharma (+0.6%) were the top gainers, while PSU Bank (-1.2%) and Oil & Gas (-0.07%) were the top losers.

What’s trending

⭐ IndusInd Bank’s robust Q3 

The bank’s consolidated net profit rose 58% YoY to₹1,964 crore. The growth came from higher interest income and lower provisions. Net interest income (NII) grew 18% YoY to ₹4,495 crore, while gross non-performing asset (GNPA) dropped sequentially to 2.06%.   

⭐ Adani transmission’s power deal 

Adani Transmission The company will acquire 100% stake in WRSR Power Transmission via a has entered into a share purchase agreement with REC Power Development and Consultancy. The company also said energy sales grew 4% YoY to 2,165 million units sold in Q3 FY23. Distribution loss improved to 5.34%.      

⭐ Sundram Fastener’s big win 

Sundram Fastener, an auto ancillary firm has secured a $250 million contract (its biggest in 60 years) to supply sub-assemblies for an electric vehicle (EV) platform. The company will invest ₹200 crore to fulfil the new order. It estimates annual sales of $52 million by 2026.    

⭐ Eris Lifesciences acquisition gets no likes 

Shares of Eris Lifesciences declined over 4% after the drugmaker acquired as many as nine dermatology brands from Glenmark Pharma for ₹340 crore. As per company the transaction will help expand its presence in the medical dermatology segment. 

In Focus

Spoiler alert: PSU Bank season trailer just dropped and markets are cheering it

Public banks could have a blockbuster on their hands. The earnings season trailer has just dropped and it looks promising. Three mid-size state owned banks have declared their numbers- net interest income, advances and CASA deposits all have risen while NPAs have declined. 

Here’s a lowdown on the numbers from Bank of Maharashtra, Bank of India and Central Bank of India.

Income has grown

All three banks are making good money. Net interest income or NII which is the difference between what the bank earns as interest on loans and pays out as interest on deposits, has increased. 

Net Interest Income, Q3FY23

Bank of Maharashtra ₹1,980 crore (▲ 29.6%)

Central Bank of India ₹3,285 crore (▲ 19.3%)

Bank of India ₹5,596 crore (▲ 64.2%)

Also up are Net Interest Margins (NIMs), a key indicator of bank profitability and growth. 

Net Interest Margin, Q3FY23

Bank of Maharashtra: 3.6% (▲ 0.4%)

Central Bank of India: 3.7% (▲ 0.7%)

Bank of India: 3.2%(▲ 1.0%)

Bad Loans have declined

Bad loans or non-performing assets (NPAs) have been a key challenge for the public sector banks, adversely impacting their profitability in the past. But not anymore. Public banks have been cleaning up their books and it’s showing. Bad loans are down. Take a look. 

Gross NPA, Q3FY23

Bank of Maharashtra: 2.9% (▼ 1.7%)

Central Bank of India: 8.8% (▼ 6.3%)

Bank of India: 7.6% (▼ 2.8%)

Bank’s business has grown

Lending is the core business of any bank and that has grown in the last quarter. Advances (loans) have recorded a double digit growth. 

Gross Advances, Q3FY23

Bank of Maharashtra: ₹1.5 lakh crore (▲ 21.6%)

Central Bank of India: ₹2.0 lakh crore (▲ 14.7%)

Bank of India: ₹5.0 lakh crore (▲ 16.0%)

Deposits have also grown

Current and savings accounts (CASA) are the cheapest source of funds for a bank and that too has seen an uptick. This has grown between 4–6%. 

In short, business is good, asset quality has improved and cost of funds is also under control. If this is any indicator for the pack (biggies SBI and PNB numbers are yet to come), the PSU Bank rally might not run out of steam, just yet. Remember, the Nifty PSU Bank index had risen over 70% in 2022.

To quote King Khan, ‘picture abhi baaki hai.’

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Good to know

What is a block deal?

Block deals are huge delivery-only share transactions with a minimum value of ₹5 crore or five lakh shares of a listed company, which generally take place between institutional investors such as mutual funds or insurance companies. Such deals happen through a separate trading window in the pre-opening minutes of the market opening and are not visible to the regular market. Investors often track block deals to judge sentiments and the interest of big investors in a stock.

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