Slide in HDFC, HDFC Bank erases weekly gains for Indian shares

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Indian stocks fell on Friday, erasing their weekly gains amid weakness in financial stocks due to declines in Housing Development Finance Corporation and HDFC Bank, and continuing concerns about the US banking sector.

The Nifty 50 index closed down 1.02 percent at 18,069.00, while the S&P BSE Sensex lost 1.13 percent, at 61,054.29.

Financial stocks led the decline in the Nifty Index, dropping 2.34 percent in the worst one-day decline in more than three months.

Housing Development Finance Company Limited And HDFC Bank The MSCI index fell more than 5.5 percent after MSCI said it had included the combined entity of the two companies in its large index, but with an adjustment factor of 0.5.

Nuvama Research has estimated that this will result in an inflow of $150 million to $200 million from the entity.

“The event is a one-off, but the business of HDFC and HDFC Bank is permanent,” said Avinash Gorakshekar, head of research at Profitmart Securities, adding that the decline in shares is temporary.

Analysts expected the Nifty 50 to consolidate after the recent rally in strong March quarter earnings, but added that the monsoons will be a key component to watch in the near term.

“If the monsoon is bad, it will cause markets to slide due to the negative impact on the economy and consumption related to agriculture in the country,” Gorakhshkar added.

The European Central Bank’s interest rate hike and concerns in the US banking sector over the collapse of Backwest Bancorp also dampened investor sentiment.

Among individual stocks, TVS Motor Company Ltd jumped nearly 4 percent to a record high after reporting an uptick in earnings for the March quarter.

The auto index rose 0.40 percent and was among the biggest sectoral gainers in a weak market.

Lending Shadow Arrow Manapuram Finance Limited Decreased more than 11 per cent after The Enforcement Directorate said it has frozen the company’s assets worth Rs 143 crore.

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