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INDIA STOCKS-HDFC, HDFC Bank weigh on Indian shares amid weak global cues

Bharath Rajeswaran
·2 min read

(Updates levels, adds details, analysts' comments from paragraph 4)

By Bharath Rajeswaran

BENGALURU, May 5 (Reuters) - Indian shares declined on Friday, dragged by high-weightage financials and weak global cues, after the European Central Bank hiked rates and fears over the U.S. banking sector worsened with the collapse of PacWest Bancorp.

The Nifty 50 was down 0.26% at 18,208.70 as of 10:40 a.m. IST, while the S&P BSE Sensex lost 0.32%.

Financials stocks led declines in the Nifty, falling 1% as Housing Development Finance Corporation Ltd and HDFC Bank Ltd lost 5% each, and were among the top losers on the index.

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The decline comes after an update on MSCI implementation for HDFC and HDFC Bank post their merger. MSCI said it will include the merged entity in its large-cap index but the adjustment factor would be 0.5.

Nuvama Research estimated the implementation to lead to an outflow of $150 million to $200 million in the merged entity.

"The event is one-time, but the business 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 monitor 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.

Global markets were subdued, as the European Central Bank's rate hike and concerns in the U.S. banking sector due to the collapse of PacWest Bancorp dragged sentiment.

Among individual stocks, TVS Motor Company Ltd jumped over 5% to a record high after reporting an uptick in March quarter profit.

The auto index rose 0.7% was among the top sectoral gainers in a weak market. ($1 = 81.6540 Indian rupees) (Reporting by Bharath Rajeswaran in Bengaluru; Editing by Nivedita Bhattacharjee and Varun H K)