RBI Action on Kotak Mahindra, Axis Bank’s Turnaround, and Performance Updates from LTI Mindtree and Dalmia Bharat

Opening Bell: 

Gift Nifty is down by 65.5 points in the early morning trade, indicating a negative opening for Indian stock market                      

On Thursday, Asian markets slid following the trends seen on Wall Street overnight, with investors awaiting significant economic data releases. The Bank of Japan initiated its monetary policy meeting today amidst yen weakness. Japan’s Nikkei 225 retreated by 1.2%, accompanied by a 0.65% decline in the Topix index. South Korea’s Kospi witnessed a 1% drop, while the Kosdaq experienced a slight downturn. Futures for Hong Kong’s Hang Seng index hinted at a soft opening.

The S&P 500 ended slightly higher on Wednesday amidst volatile trading, with investors assessing a rise in Treasury yields alongside encouraging corporate earnings, notably from tech leaders. Closing at 5,071.63, the S&P 500 edged up by 1.08 points, marking a 0.02 percent increase. Meanwhile, the Nasdaq Composite climbed 16.11 points, or 0.10 percent, to settle at 15,712.75. Conversely, the Dow Jones Industrial Average dipped by 42.77 points, or 0.11 percent, closing at 38,460.92.

Stocks News:

👉 Kotak Mahindra Bank: The Reserve Bank of India has prohibited Kotak Mahindra Bank from acquiring new customers via its online and mobile banking platforms and issuing fresh credit cards due to supervisory concerns regarding its technology systems. This action comes after an RBI examination of the bank’s IT infrastructure over the past two years and its failure to address ongoing issues. Existing customers will not be affected by the ban, and Kotak can continue to serve them, including those with credit cards.

👉 Axis Bank: Despite increased provisions for bad loans, Axis Bank reported a standalone net profit of Rs 7,130 crore for the March FY24 quarter, a significant turnaround from the Rs 5,728.4 crore loss in the same period last fiscal year. Net interest income grew by 11.5 percent year-on-year to Rs 13,089 crore, with a net interest margin of 4.06 percent. Asset quality also improved, with gross NPA decreasing by 15 bps sequentially to 1.43 percent and net NPA falling by 5 bps QoQ to 0.31 percent in Q4 FY24.           

👉 LTI Mindtree: Despite weak revenue and operating numbers, the IT services company recorded a consolidated net profit of Rs 1,100.7 crore for the March FY24 quarter, a 5.9 percent decline compared to the previous quarter. Revenue from operations during the quarter fell by 1.4 percent sequentially to Rs 8,893 crore, with revenue in dollar terms and constant currency terms also declining by 1.3 percent each QoQ. The company experienced a 30 bps sequential decline in EBITDA margin to 17.3 percent and a 70 bps fall in EBIT margin to 14.7 percent for the quarter.

👉 Dalmia Bharat: Dalmia Bharat recorded a consolidated net profit of Rs 320 crore for the quarter ended March FY24, marking a significant 47.4 percent decline compared to the same period in the previous fiscal year, partly due to weak operating performance. Revenue from operations grew by 10 percent YoY to Rs 4,307 crore for the quarter, driven by a volume growth of 18.5 percent. Additionally, the high base in Q4 FY23, influenced by the share of profit in associates and joint ventures, contributed to the variance.

👉 Foreign institutional investors (FIIs) net sold shares worth Rs 2,511.74 crore, while domestic institutional investors (DIIs) bought Rs 3,809.90 crore worth of stocks on April 24, provisional data from the NSE showed.

Domestic and International Events

• Goldman Sachs (GS.N), opens new tab has hired two senior bankers in India to cash in on growing dealmaking and investor interest in the South Asian country, three sources with direct knowledge told Reuters on Wednesday. Sunil Khaitan will be Goldman’s India head of financing and Kamna Sahni India head of Mergers & Acquisitions (M&A) in Mumbai, the sources said, adding that the executives will join the bank in the next few months.

• The US bond market remained under pressure after a $70 billion auction of five-year notes “tailed slightly.” The auction was awarded at 4.659%, a bit higher than the 4.655% yield in pre-auction trading. The benchmark 10-year Treasury note rose six basis points to 4.66%, while the yield on the 2-year note surpassed 4.95% during the session.

• Gold prices steadied Wednesday amid eased Middle East tensions, with focus on forthcoming US economic data for potential Federal Reserve rate clues. Spot gold held at $2,322.60 per ounce by 12:30pm ET (1630 GMT), after hitting a recent low. US gold futures slipped 0.3% to $2,336.10, while spot silver dipped 0.2% to $27.22.

• Oil prices dipped Wednesday as concerns eased over Middle East conflict and slowed business activity in the top oil consumer, yet a drop in US crude inventories limited the decline. Brent crude futures slid by 27 cents (0.31%) to $88.15 a barrel, with US West Texas Intermediate crude futures down 38 cents (0.46%) at $82.98. No FII and DII data provided.