Piramal to takeover DHFL loans? Yes Bank, Canara Bank, Union Bank of India may benefit | Jefferies Highlights

Jefferies says that certain reports are indicating Piramal group might win creditors' approval to take over DHFL's loans. This is NPL for banks and mostly fully provided. The companies have yet to confirm the report and there may be risk of litigation from co-bidders as some offered higher value. Deal may lead to 40% recovery and be marginally positive for lenders, PSUs (like BOI, Canara Bank, Union Bank of India) and private banks like Yes Bank with higher exposure. DHFL's loans of Rs 950 bn compare with Rs 520 bn of PEL.

Nifty was up 0.6% last week. It was one of the weaker performing markets in the region, underperforming EMs by 0.7 ppt. Autos and IT were the top outperformers, while metals and cap goods were the top underperformers. The INR appreciated by 0.2% vs the USD WoW. Ten-year G-Sec bond yields were up 8bps WoW to 5.95%. Active COVID-19 cases were down 6% further this week, after declining by 11% last week.

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Religare Broking says that markets traded volatile and settled with a cut of over a percent. Participants were in the profit-taking mood from the beginning citing overbought market conditions. Besides, the global cues too remained unsupportive in today’s session. After a flat start, the Nifty index witnessed a gradual decline as the session progressed and finally at 14,434 levels. The broader markets also remained under pressure as both Midcap and Smallcap ended with losses of 1% each. On the sector front, except telecom, all the other indices ended with losses wherein Oil & Gas, Capital Goods and IT were the top losers.

Religare Broking have been maintaining positive yet cautious stance on the market citing the possibility of profit-taking/consolidation in markets and reiterate the same view for Monday. Since the overall trend is up, it’s prudent for the participants, those who were sitting on the sidelines for correction, to utilise this phase and buy quality stocks on dips.

On the other hand, it would be difficult for traders to manage positions as both indices and stocks usually see volatile swings during such phases and the beginning of earnings season has further added to the choppiness. It’s prudent to avoid naked leveraged positions for now and prefer hedged strategies. In case of a further slide, Nifty would find immediate support at 14,250 and then 14,100 zone.