Sensex flat at open; Tata Motors, HDFC Bank, ONGC among top gainers

Chinese tech stocks were in focus after the Cyberspace Administration of China (CAC) ordered an investigation into Didi Global Holdings, just days after it listed on the New York Stock Exchange (NYSE).

The Hang Seng was down 0.6% while the Nikkei is trading 0.3% higher. The Shanghai Composite was down 0.5%.

US stock markets were closed on Monday to mark the Independence Day holiday.

Back home, domestic equities opened on a flat note, following the trend on SGX Nifty. The BSE Sensex was up 27 points, while NSE Nifty is traded 15 points higher.

ONGC was among the top gainers so far today. Tech Mahindra, on the other hand, fell the most.

The BSE Mid Cap index opened up by 0.2% and the BSE Small Cap index traded 0.3% higher.

Sectoral indices traded mixed with automobile and realty stocks witnessing buying interest. Power stocks, on the other hand, traded in the red.

Shares of KPR Mill and Avanti Feeds hit their 52-week highs today.

The rupee was at 74.33 against the US dollar.

Gold prices rose 0.3% to 47,458 per 10 grams. Meanwhile, silver prices were 0.4% higher at 70,280 per kg.

Gold hovered close to two-week highs, helped by a subdued dollar, while investors awaited minutes from the US Federal Reserve’s June policy meeting for more clarity on monetary policy going forward.

Crude oil prices rose yesterday, with Brent trading around two-and-half-year highs, at $77.11 a barrel after the OPEC+ ministers abandoned talks and set no new date to resume them.

In news from the banking sector, HDFC Bank was among the top buzzing stocks today.

Private lender HDFC Bank on Monday shared headline numbers for its June quarter, which showed loan growth moderation and contraction in its retail credit book.

HDFC Bank’s overall advances grew at a modest pace of 14% year-on-year (YoY) and 1.3% sequentially, taking its total loan book to Rs11.5 lakh crore. The bank’s retail disbursements were down 30% sequentially, reflecting the impact of the second Covid wave.

The continued weakness in the retail segment led to retail segment’s share in total loans slipping down to 45% from 47% in June quarter last year. Non-retail loans, including commercial and rural loans grew at a healthy pace of 25% YoY and 11% YoY, respectively.

HDFC Bank’s deposit growth remained moderate at 13% YoY, while CASA deposits continued to register strong growth at 28%. The lender saw traction on retail term deposits during the quarter as total retail deposits grew 17% YoY.

HDFC Bank shares had opened 0.8% higher today.

Note that, HDFC Bank is one that has always adapted to changing times.

HDFC Bank wanted to transform itself from a leader in the physical banking to a leader in online banking. Since then, HDFC Bank has constantly focused on going digital.

In 2004, only 10% of customer transactions were initiated through internet and mobile. The number has gone up to 92% in 2019.

View Full Image

HDFC Bank’s customer transactions.

It is a great example of a company which has taken advantage of its scale and embraced disruption rather than fear it.

These are traits that one should look for in picking stocks. They not only withstand the disruption but also gain from it in the long-run.

Moving on to news from the aviation sector, airline stocks are in focus today.

The Centre on Monday allowed airlines to marginally increase the number of domestic flights allowed from 50% of pre-Covid to 65%. This would mean more flight options for passengers, which will help airlines add flights but regulating capacity and airfares would impact revival.

The government, which had earlier allowed airlines to go up to 80% of total pre-covid capacity of about 3,000 flights daily, had reduced it to 50% from 1 June.

India’s largest carrier Interglobe Aviation (IndiGo) had requested the government to completely waive off capacity regulation.

Since May 2020, the centre has been regulating capacity as well as fares in the domestic sector. It had started by allowing up to 33% and increased it to up to 80%.

For the Indian aviation sector, CAPA, which provides market intelligence to the aviation industry, made a grim admission in its annual outlook saying they have run out of words to describe the state of Indian airlines.

The industry is standing on the edge of a cliff. This is true even for airlines with access to large pools of capital.

CAPA forecasts airline losses of $8 billion for financial year 2021 and 2022 combined. It has said airlines will need $5 billion to stay aloft but only have access to $1.1 billion through share offerings and other sources.

How the Indian aviation sector makes a turnaround in the stormiest weather remains to be seen.

Airline stocks opened on a positive note today, with SpiceJet and IndiGo higher by 2.3% and 2.4%, respectively.

(This article is syndicated from Equitymaster.com)

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