Why Sensex surged 1,397 pts today despite a trade war brewing in the US?
Markets in India climbed after tariffs imposed on Mexico and Canada were postponed for now, and investors assessed budget announcements fully, according to market experts
Stock Market Rally:
In the domestic market, the 30-stock BSE Sensex had climbed around 1,472 points, or 1.9 per cent, to hit an intra-day high of 78,658.6. Similarly, the NSE Nifty50 climbed 402 points, or 1.7 per cent, to an intra-day high of 23,762.7 from the previous close.
At close, the Sensex settled at 78,583.81, up 1,397.07 points or 1.81 per cent from its previous close. Similarly, the NSE Nifty50 ended at 23,739.25, up 387.20 points or 1.62 per cent.
The gains in the benchmarks were led by L&T share price (up 4.3 per cent), IndusInd Bank share price, Adani Ports share price, Tata Motors share price, Reliance Industries (RIL share price), Ultratech Cement share price, NTPC share price, and HDFC Bank share price up 2.5 per cent).
Other notable indices, including the Nifty Bank, Financial Services, Metal, Pharma, and Healthcare were settled with gains of up to 2 per cent. The Nifty FMCG index was the only index in the red, down 0.25 per cent.
In the broader markets, the BSE MidCap index gained 1.35 per cent, and the BSE SmallCap was higher by 1.2 per cent.
According to market experts, the markets climbed on Tuesday on the back of a number of factors, primary among them were the announcements made in the budget and the postponement of the tariffs announced by President Donald Trump on Canada, and Mexico, even as China retaliated with its own tariffs on US goods imports.
Budget Boost
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Independent market analyst, Ambareesh Baliga said the overall budget is not bad, but people are disappointed with no growth in infra spends. "You look at the absolute figure, that figure itself is decently large, and last year, we could not even execute it in the infra side of things," he said.
Along similar lines, Gaurang Shah, head investment strategist of Geojit Financial Services, said it takes a few days to understand the budget.
"It takes the two days to understand the budget, so there is nothing new. It was a knee-jerk reaction on Saturday; it was a knee-jerk reaction yesterday," he said.
Shah added that the capex allocation is better than what it was last time. "You should see improvements coming in the markets," Shah added.
That apart, Baliga highlighted that the changes in income tax regime announced in the budget were sentimentally positive.
"Sentimentally that's an upside, no doubt. At least some part of that will come into consumption. You can't say 100 per cent will come into consumption, because there are other things. People may utilise that money to invest, they may even put that money in the FDs, or they may use that to pay off the EMIs," Baliga said.
Trump's Tariff Tantrums
About the risk emanating from Trump's tariff regime, Baliga said, "When Trump announced the tariffs, it had an effect. But now what we are seeing is that it is more of a negotiation trick. The whole thing has been postponed to some extent because of the negotitations which will happen now; whether it is Mexico, Canada or even China. Because of which, we are seeing this bounce back".
Meanwhile, Shah also credited the upside in the markets today to the tariffs imposed by the US on Mexico and Canada being postponed by a month.
"Today we have an added advantage: understanding the budget more clearly, and tariffs on Mexico and Canada have been pushed back by one month. Hence the market (climbed)," he said.
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Home / Markets / News / Manappuram Finance rallies 5% on heavy volumes; hits over 4-month high
Manappuram Finance rallies 5% on heavy volumes; hits over 4-month high
For Manappuram Finance, the gold loan growth will continue to remain healthy, driven by demand-side tailwinds due to the poor availability of short-term personal and MFI loans.
Shares of Manappuram Finance hit an over 4-month high at Rs 205, as they rallied 5 per cent on the BSE in Tuesday’s intra-day trade amid heavy volumes. The stock of the non banking finance company (NBFC) was quoting at its highest level since September 27, 2024. A combined 8.78 million equity shares changed hands on the NSE and BSE till 01:55 PM.
In the past three weeks, it has surged 20 per cent. In the past one month, Manappuram Finance has outperformed the market by surging 15 per cent, as compared to 0.5 per cent rise in the BSE Sensex.
The outperformance in the stock came after the Reserve Bank of India (RBI) on January 8 informed that the Central Bank lifted restrictions imposed on Manappuram Finance arm Asirvad Micro Finance.
"We are pleased to inform you that the Reserve Bank of India, vide its letter dated January 8, 2025, has lifted the restrictions imposed on Asirvad Micro Finance Limited with respect to sanction or disbursal of loans with immediate effect," the filing read.
“…having satisfied itself based on companies’ submissions, and in view of their adoption of revamped processes, systems, and the companies’ commitment to ensuring adherence to the regulatory guidelines on an ongoing basis, especially for ensuring fairness in the loan pricing, the RBI has decided to lift the afore-mentioned restrictions placed on both, Asirvad Micro Finance and DMI Finance, with immediate effect”, RBI said in a statement.
The revocation of this ban is a positive development, especially considering it occurred in less than three months, which is significantly shorter than initial base case assumption of six months. This may have been possible due to the constructive efforts made by Asirvad to work with the regulator to have the ban lifted. Additionally, given that the microfinance institution (MFI) sector itself is going through a state of turmoil, Motilal Oswal Financial Services believe the regulator has shown empathy toward the four lenders (including Asirvad) who were previously served business bans.
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For Manappuram Finance, the gold loan growth will continue to remain healthy, driven by demand-side tailwinds due to the poor availability of short-term personal and MFI loans. However, we foresee risks of spread compression in its gold loan business, as the company has started focusing on slightly higher ticket size gold loans, the brokerage firm said.
Meanwhile, on January 29, 2025, Smallcap World Fund, Inc acquired an additional 2.4 million equity shares or 0.28 per cent stake in Manappuram Finance through open market deals. Post acquisition, Smallcap World Fund, Inc holding in the company increased to 5.03 per cent from 4.75 per cent, according to stock exchange disclosure.
Manappuram Finance is a NBFC in India, primarily known for its gold loan business. It offers a range of financial services including gold loans, personal loans, microfinance, business loans, insurance, and foreign exchange services. The company provides quick loans against gold jewelry, catering to individuals and businesses in need of immediate liquidity without requiring extensive documentation. Manappuram is also involved in the retail sale of gold coins and bullion.
Manappuram Finance will look to continue its growth journey in the core gold and secured non-gold portfolios. The management indicated that repayments from the Vehicle/MSME/Housing portfolio are expected to improve from Q4FY25 onwards, with green shoots visible in early Q3FY25.
Analysts at Axis Securities expect Manappuram’s RoA to be capped at 4.3 per cent over FY25-26E factoring in higher credit costs, lower NIMs and increased Opex given aggressive collection efforts, before improving to ~4.6 per cent by FY27 as conditions normalise. The company will look to maintain MFI AUM growth between 15-20 per cent with the primary focus being on credit quality and credit discipline.
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