Bajaj Finance Jumps 5% to Lead Sensex as Markets Snap Eight-Day Losing Streak

Bajaj Finance did most of the heavy lifting on Dalal Street on Monday morning. The country's largest non-banking lender climbed as much as 5% to Rs 995.40 on the BSE, up from Friday's close of Rs 949.35, making it the biggest gainer on both the Sensex and the Nifty 50 as Indian equities finally broke an eight-session losing run.

Two triggers for one stock

The first trigger was the company's September-quarter business update. Assets under management rose 26.5% from a year earlier to Rs 5.85 lakh crore, compared with Rs 4.62 lakh crore at the end of the same quarter last year. The customer franchise grew to 128.85 million from 110.64 million, new loans booked rose 11% to 13.45 million, and the deposit book stood at Rs 69,750 crore as of September 30.

The second was a capital plan. Bajaj Finance's board has approved raising up to Rs 17,500 crore through a qualified institutional placement combined with a preferential issue of warrants, with the warrant portion sized at up to Rs 5,800 crore. Fresh equity of that scale gives the lender room to keep growing its loan book at a fast clip without stretching its capital ratios, which is the question analysts tend to ask whenever AUM growth runs well ahead of the broader credit market.

The move lifted the company's market value to about Rs 6.18 lakh crore. Even so, the stock remains below all of its key moving averages from the 5-day to the 200-day, a reminder of how deep the recent sell-off in financials has been. It is still about 26% above its 52-week low of Rs 788.40, hit in March.

A relief rally that lost steam

The broader market opened with a gap up. By 10 am the Sensex was up 644 points, or 0.9%, at 72,554, and the Nifty 50 had gained 190 points to 22,612. HDFC Bank added close to 2% after the Reserve Bank of India's approval of Anup Bagchi as its next chief executive, and the Nifty PSU Bank index led sectoral gainers with a rise of nearly 1.8%.

The enthusiasm did not hold. Selling in IT, auto and some private bank shares pulled the indices back, and by 11 am the Sensex's gain had shrunk to about 246 points at 72,156, while the Nifty was up 75 points at 22,497, just below the 22,500 mark.

One gauge stayed calm through the retreat. The India VIX, which tracks expected near-term volatility, fell 6.6% to 13.50, suggesting traders are less worried about sharp swings in the days ahead even as they hesitate to chase prices higher.

Why caution persists

Part of the morning's optimism came from overseas. Weaker-than-expected US jobs data has led traders to scale back bets on further rate hikes by the Federal Reserve, which eases some of the pressure on emerging-market assets.

Closer to home, however, the Reserve Bank of India's Monetary Policy Committee began its three-day meeting today, with a decision due on October 7. Many economists expect a 25 basis point increase in the repo rate from 5.25%, given crude above $100 a barrel, a rupee weaker than 96 to the dollar and retail inflation climbing. Borrowers watching that decision can use our EMI calculator to see how a quarter-point move would change their monthly payments.

Until that decision lands, stock-specific triggers such as Bajaj Finance's update are likely to drive more of the action than the indices themselves.

This is an original summary based on public reporting. See our editorial policy for how we source, write, and correct our stories.