The first few days of April were great for the stock market. The Sensex jumped more than 2 percent during this period and today i.e. on Monday, April 4, it closed at its highest level of last two and a half months. On Monday, there was a jump in all the segments of the market. However, both the shares of HDFC contributed the most to the rise of Sensex. The announcement of the merger of HDFC Ltd with HDFC Bank led to a sharp jump in the shares of both the companies.
Both the benchmark indices – Sensex and Nifty – managed to cross the psychological level again. While Sensex closed above 60 thousand mark, Nifty50 crossed the level of 18 thousand.
The Sensex on Monday closed at 60,612 points, up 1,335 points or 2.25 per cent, its highest level since January 18. On the other hand, Nifty closed at 18,053 points, up 383 points or 2.17 per cent.
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The rise of 932 points or about 70 percent in the BSE Sensex came only from both the shares of HDFC. Similarly, about 57 percent of the total jump in Nifty was contributed by both the shares of HDFC alone. The combined weightage of both the companies in the Sensex will be the highest after the merger.
At present, the weightage of HDFC and HDFC Bank shares is at third and fifth position respectively in BSE Sensex. However, after the merger of the two, the combined weightage of HDFC Bank could be 16.4 per cent. Currently, Reliance Industries is at the top spot in the BSE Sensex with a weightage of 13.6 per cent, while Infosys is at the second position with a weightage of 10.4 per cent.
Naveen Kulkarni, Chief Investment Officer, Axis Securities said, “The mega merger of HDFC with HDFC Bank will help HDFC build a strong housing loan portfolio and unlock value by expanding its existing customer base. Can become the company with the highest weightage.”
He said the merger boosts confidence in the Indian economy and paints a promising picture for the long term, away from concerns about Russia-Ukraine war and inflation.
Naveen Kulkarni believes that the next rally in the market could be led by the banking and financial services sector stocks and expressed hope that the fourth quarter results of banks could be excellent due to the steady improvement in loan growth.
HDFC Bank will be the second largest corporate of the country
In terms of market capitalization, HDFC Bank will become the second largest listed company in the country after the merger. HDFC Bank and HDFC have a combined market cap of over Rs 14.02 lakh crore, as of April 4 market price. Currently, Tata Consultancy Services (TCS) is at number two with a market cap of Rs 13.79 lakh crore, Reliance Industries remains at number one with a market cap of Rs 18 lakh crore.
The total market capitalization of BSE reached Rs 272.4 lakh crore on April 4, the highest since January 20. On March 7, the market touched its lowest level of 7 months and since then the market cap of BSE has increased by Rs 31 lakh crore.
On Monday, HDFC Bank gained 9.81 per cent to Rs 1,654 and HDFC Ltd rose 9.15 per cent to Rs 2,675.25 on the BSE on Monday.