Slower Growth Hits IndusInd
- 01st February 2025
Aaj Ka Bazaar
The US markets closed the week on a down note after the White House announced that President Donald Trump would impose 25% tariffs on Mexican and Canadian imports and 10% tariffs on Chinese imports. This negative sentiment stemmed from concerns about the tariffs’ impact on the economy and inflation. Domestically, as the country gears up for the Union Budget, the markets are expected to open Saturday’s trading session positively, as anticipation towards the budget is likely overpowering the influence of the US dec;ine. Throughout the day, participants will closely follow Nirmala Sitharaman’s eighth Union Budget speech, which is anticipated to drive market momentum. We remain optimistic about the budget and expect the market to continue its rally from yesterday.
Markets Around Us
BSE Sensex -77,698.74 (0.26%)
Nifty 50 – 23,567.40 (0.25%)
Bank Nifty – 49,773.55 (0.38%)
Dow Jones – 44,544.66 (-0.75%)
Nasdaq – 19,623.27 (-0.30%)
FTSE – 8,673.96 (0.31%)
Nikkei 225 – 39,572.13 (0.00%)
Hang Seng – 20,255.11 (0.00%)
Sector: Banking
IndusInd Bank Ltd. Q3FY25
Private lender IndusInd Bank reported disappointing performance in Q3FY25, primarily due to slower loan growth, elevated slippages, and increased credit costs. These developments were expected, as management has been cautious in disbursing loans, particularly in the MFI segment, where the bank is the second largest lender. This cautious approach has contributed to sluggish credit growth during the quarter. The bank is gradually reducing its exposure in the MFI sector. Vehicle financing activity exhibited muted growth, but there are expectations for improvement in Q4FY25. In previous quarter, management projected a growth of 16%, so it will be important to monitor whether this guidance has been revised in light of recent performance. NIMs experienced compression due to a decline in the high-yielding MFI loan segment and rising deposit costs. However, there is optimism that NIMs will improve if growth in the microfinance sector resumes. In terms of asset quality, both GNPA and NNPA deteriorated, and Return on Assets also declined, indicating increased stress.
Why it Matters:
Deposit growth remained strong, driven by retail deposits. Overall, IndusInd Bank reported a weak quarter in Q3FY25. Moving forward, we will closely monitor management’s strategy regarding credit costs and to ensure that NIMs and slippages show improvement.
NIFTY 50 GAINERS
ITCHOTELS – 166.80 (2.36%)
ULTRACEMCO – 11749.65 (2.28%)
INDUSINDBK – 1013.80 (2.28%)
NIFTY 50 LOSERS
ONGC – 258.70 (-1.48%)
HEROMOTCO – 4283.00 (-1.29%)
NESTLEIND – 2290.05 (-1.00%)
Sector: Banking
IndusInd Bank Ltd. Q3FY25
Private lender IndusInd Bank reported disappointing performance in Q3FY25, primarily due to slower loan growth, elevated slippages, and increased credit costs. These developments were expected, as management has been cautious in disbursing loans, particularly in the MFI segment, where the bank is the second largest lender. This cautious approach has contributed to sluggish credit growth during the quarter. The bank is gradually reducing its exposure in the MFI sector. Vehicle financing activity exhibited muted growth, but there are expectations for improvement in Q4FY25. In previous quarter, management projected a growth of 16%, so it will be important to monitor whether this guidance has been revised in light of recent performance. NIMs experienced compression due to a decline in the high-yielding MFI loan segment and rising deposit costs. However, there is optimism that NIMs will improve if growth in the microfinance sector resumes. In terms of asset quality, both GNPA and NNPA deteriorated, and Return on Assets also declined, indicating increased stress.
Why it Matters:
On a positive note, deposit growth remained strong, driven by retail deposits. Overall, IndusInd Bank reported a weak quarter in Q3FY25. Moving forward, we will closely monitor management’s strategy regarding credit costs and to ensure that NIMs and slippages show improvement.
Around the World
In the United States, major stock indexes are showing mixed results as investors digest the latest earnings reports and economic data. The S&P 500 is up slightly, boosted by strong performances in tech stocks, while the Dow Jones is facing pressure from weaker-than-expected results in the industrial sector. In Europe, stock markets are down, with concerns over inflation and higher interest rates in the eurozone weighing on investor sentiment. The German DAX and UK’s FTSE 100 are both seeing declines as investors react to slower economic growth forecasts. In Asia, the Japanese Nikkei has seen a rise, driven by a rebound in tech stocks and investor optimism ahead of a major government stimulus package. Meanwhile, China’s Shanghai Composite is experiencing volatility as concerns about economic recovery continue to affect investor confidence. In emerging markets, Brazil’s Bovespa index has gained momentum due to stronger commodity prices.
Option Traders Corner
Max Pain
Nifty 50 – 23,250
Bank Nifty – 49,300
Nifty 50 – 23,444 (Pivot)
Support – 23,341 23,174, 23,072
Resistance – 23,611, 23,713, 23,780
Bank Nifty – 49,431 (Pivot)
Support – 49,187, 48,788, 48,544
Resistance – 49,830, 50,044, 50,473
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