Federal Bank Profit Dips
- 28th January 2025
Aaj Ka Bazaar
US benchmarks showed a mix of performances, with both the Nasdaq and S&P 500 registering losses, while the Dow Jones Industrial Average (DJIA) remained positive. The decline in the Nasdaq and S&P 500 was mainly due to the significant drop in tech stocks, particularly Nvidia, after the introduction of DeepSeek, a Chinese AI assistant that’s much cheaper than its US counterparts, affecting the AI landscape dynamics. Over in Asia, the Nikkei fell as the US tech stock turmoil spread to Japan, and the strengthening yen further dampened market sentiment. Meanwhile, the Hang Seng index stayed nearly flat after starting the day strong. Domestically, markets are expected to open on a positive note, but global sentiments might influence the benchmarks as the day goes on. The IT sector is predicted to remain under pressure due to the developments around DeepSeek and the general weakness in global tech sentiment.
Markets Around Us
BSE Sensex –75,652.76 (0.38%)
Nifty 50 – 22,906.40 (0.34%)
Bank Nifty – 48,563.35 (1.04%)
Dow Jones – 44,677.63 (-0.10%)
Nasdaq – 19,343.41 (-3.06%)
FTSE – 8,503.71 (0.02%)
Nikkei 225 – 39,142.50 (-1.07%)
Hang Seng – 20,277.23 (0.20%)
Sector: Bank
Federal Bank Slides on Q3 Profit
Federal Bank shares dropped 7% after reporting a weaker-than-expected Q3 net profit of ₹955.4 crore, down 5% year-on-year and below estimates of ₹1,022 crore. The decline was driven by a surge in provisions, which more than doubled to ₹290 crore. Despite this, the bank’s net interest income grew nearly 15% year-on-year to a record ₹2,431.3 crore, beating expectations. On the asset quality side, slippages rose 14.7% quarter-on-quarter, but strong recoveries and upgrades helped reduce the gross NPA ratio to 1.95% and the net NPA ratio to 0.5%. At 10:09 AM, Federal Bank shares were trading at ₹178.76 on the NSE. Analysts attributed the weak bottom line to higher provisions, though operational metrics like net interest income and improved asset quality offered some positives for the bank’s overall performance.
Why it Matters:
Federal Bank’s weaker Q3 profit signals pressure from higher provisions, impacting investor confidence as shares fell 7%. Despite record net interest income and improving asset quality, the unexpected profit miss raises concerns about cost management. Traders are closely watching for signs of recovery in the upcoming quarters.
NIFTY 50 GAINERS
SHRIRAMFIN – 523.50 (2.32%)
INFY – 1857.20 (1.93%)
AXISBANK – 965.50 (1.84%)
NIFTY 50 LOSERS
SUNPHARMA – 1726.00 (-3.41%)
NTPC – 316.40 (-1.80%)
DRREDDY– 1179.60 (-1.51%)
Sector: Energy
Adani Total Gas Profit Drops
Adani Total Gas shares fell 1.09% on January 28 after the company reported a 19% year-on-year drop in Q3 net profit to ₹142.38 crore, down from ₹176.64 crore a year ago. The profit also declined 23.28% sequentially. Despite this, revenue grew 13% to ₹1,400.88 crore, reflecting operational strength. However, profits were impacted by higher natural gas procurement costs, which rose 20% due to reduced government gas supplies in October-November. The shortfall forced the company to buy costlier natural gas to maintain uninterrupted CNG supply. After opening flat and hitting a high of ₹627.15 per share, the stock reversed gains and traded at ₹612.65 on the NSE
Why it Matters:
Adani Total Gas’s profit decline highlights rising input costs, with higher gas procurement expenses eroding margins despite revenue growth. The stock’s reaction reflects investor concerns about cost pressures and profitability. Traders are monitoring how the company navigates fluctuating gas supply and pricing dynamics.
Around the World
Asian markets traded flat-to-lower on Tuesday, with Japan’s Nikkei falling nearly 1% as major chipmakers like Advantest and Tokyo Electron slid on concerns about a new AI model, DeepSeek, which matches top competitors like ChatGPT but uses cheaper hardware, threatening demand for advanced AI chips. Chinese and South Korean markets were closed for Lunar New Year, while Hong Kong’s Hang Seng rose 0.2%, with gains in tech giants like Alibaba and Tencent, fueled by optimism around China’s AI advancements. Australian markets stayed cautious ahead of key inflation data, which could influence interest rate decisions, while Indian stocks signaled a positive recovery after recent lows. Meanwhile, U.S. markets showed signs of stabilization after tech-heavy losses, and traders await major U.S. tech earnings and the Federal Reserve’s interest rate decision later this week.
Option Traders Corner
Max Pain
Nifty 50 – 23,200
Bank Nifty – 49,000
Nifty 50 – 22,874 (Pivot)
Support – 22,741, 22,653, 22,521
Resistance – 23,962, 23,095, 23,182
Bank Nifty – 48,076 (Pivot)
Support – 47,832, 47,600, 47,357
Resistance – 48,307, 48,551, 48,782
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