Sensex Tanks 1,172 Points, Nifty Ends Below 17,200; IT Stocks Witness Huge Selling

Mon, 18 Apr Closing

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Indian share markets witnessed negative trading activity throughout the day today and ended deep in the red.

Markets resumed trade after a two-day holiday last week. Benchmark indices trade heavily in red, hammered by a dive in IT sector after Infosys tanked over 7%.

At the closing bell, the BSE Sensex tanked 1,172 points, down nearly 2%.

Meanwhile, the NSE Nifty slumped 302 points, ending below 17,200 levels.

Infosys, HDFC, and HDFC Bank were among the top losers.

NTPC, Tata Steel, and Maruti Suzuki, on the other hand, were among the top gainers.

In the broader markets, the BSE Midcap index slipped 0.9% while the BSE Smallcap index fell 1%.

Among sectors, IT stocks lost the most, shedding over 4%. Whereas despite weak momentum, buying interest was seen in certain auto, metals, FMCG, and power stocks.

Witnessing a sharp sell-off in the equity market, gold prices are up 0.9% trading at Rs 53,400 per 10 grams whereas silver prices are trading up by 1.4%.

The rupee is trading at 76.27 against US$.

The SGX Nifty was down by 1.5% at the time of writing and Nikkei slipped by 1.1% closing at 26,799.7.

In news from the IT sector, Larsen & Toubro (L&T) was among the top buzzing stocks today.

L&T is weighing a merger between two of its publicly traded software firms L&T Infotech and Mindtree.

Larsen took control of Mindtree by making the first hostile takeover in the IT industry in 2019.

The takeover of Mindtree started when L&T bought 20.3% shares in Mindtree from Cafe Coffee Day founder VG Siddhartha in March 2019. It also made on-market purchase of around 15% capital shares. In June 2019, L&T made an open offer for an additional 31% stake.

The conglomerate holds 61% stake in Mindtree and around 74% stake in L&T Infotech. Individually, L&T Infotech has a market value of US$ 13.6 bn while Mindtree has a market capitalization of US$ 8.3 bn. If the merger goes through, it would create a US$ 22 bn entity.

Larsen seeks scale to compete with global giants. The merger, if it happens, would look for cost synergies. Admin costs, like HR would come down.

According to reports, the firms' boards could consider share swap ratios for the merger as early as next week. Separately, Mindtree and L&T Infotech would be conducting board meetings to report their earnings on April 18 and 19, respectively.

We will keep you updated on the latest developments from this space. Stay tuned.

Shares of L&T Infotech closed 2.7% lower while Mindtree fell 3.4%.

Moving on to the finance sector, HDFC Bank will consider dividend for the financial year 2022 on 23 April 2022.

In its regulatory filing on 16 April 2022, HDFC Bank said:

• We wish to inform you that a meeting of the Board of Directors of HDFC Bank Limited ("the Bank") shall be held on April 23, 2022, to inter alia consider a proposal for a recommendation of dividend on the equity shares of the Bank for the financial year ended March 31, 2022.

Last week on Saturday, the private lender announced its quarterly results for March 2022.

HDFC Bank's net profit jumped 22.8% to reach Rs 1 tn, a growth of 22.8% compared to the same quarter last year.

Net interest income (NII), the difference between interest earned (via lending activities) and interest paid (to depositors) soared to Rs 1.9 tn posting a growth of 10.2% YoY.

Gross non-performing assets as a ratio of gross advances stood at 1.17% while CASA ratio improved from 46.1% in Q4FY21 to 48.2% in the quarter under review.

Recently, India's largest private housing finance company, HDFC, had announced its merger into its subsidiary HDFC Bank.

The stock has come under a lot of pressure ever since rising 15% on the merger announcement date. Since then, it has fallen over 15% as can be seen in the chart below.

HDFC Bank share price ended the day down by 4.7%.

To know more about the company, check out HDFC Bank's financial factsheet and its latest quarterly results.

Speaking of HDFC Bank, we recently recorded a video on Equitymaster YouTube channel comparing HDFC Bank and Bajaj Finance.

Tune in to the below video to know which stock has the edge over the other.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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