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HDFC, HDFC Bank Wipe Out Weekly Gains For Shares

The Nifty 50 closed 1.02 per cent lower at 18,069, while the S&P BSE Sensex lost 1.13 per cent to 61,054

Photo Credit : Reuters


Indian shares declined on Friday and erased weekly gains amid weakness in financials stocks due to declines in Housing Development Finance Corp and HDFC Bank and persistent fears over the US banking sector.

The Nifty 50 closed 1.02 per cent lower at 18,069, while the S&P BSE Sensex lost 1.13 per cent to 61,054.

Financials stocks led the slide in the Nifty, falling 2.34 per cent in the worst single-day drop in over three months.

Housing Development Finance Corp and HDFC Bank declined over 5.5 per cent each after MSCI said that it included the merged entity of the two companies in its large-cap index but with an adjustment factor of 0.5.

Nuvama Research estimated that this would lead to an outflow of USD 150 million to USD 200 million from the entity.

“The event is one-time, but the businesses of HDFC and HDFC Bank are perpetual,” said Avinash Gorakshakar, head of research at Profitmart Securities, adding that the fall in the shares is temporary.

Analysts expected Nifty 50 to consolidate after the recent rise on strong March-quarter earnings but added that monsoons would be a key monitorable in the near term.

“If monsoons are poor, it will spark a slide in markets due to adverse impact on the country's predominantly agri-linked economy and consumption,” Gorakshakar added.

European Central Bank's rate hike and concerns in the US banking sector due to the collapse of PacWest Bancorp also dragged investor sentiment.

Among individuals, TVS Motor jumped nearly 4 per cent to a record high among individual stocks uptick in March-quarter profit.

The auto index rose 0.40 per cent and was among the top sectoral gainers in a weak market.

Shares of shadow lender Manappuram Finance fell over 11 per cent after India's financial crime agency, Enforcement Directorate said that it froze assets of the company worth 1.43 billion rupees.


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