Mumbai: The Sensex vaulted 1,335 points while the Nifty shot past the 18,000-mark on Monday, fuelled by index heavyweights HDFC twins which soared almost 10 %  after announcing corporate India’s biggest merger.
India’s largest housing finance company HDFC Ltd will merge with the country’s top private lender HDFC Bank to create a banking behemoth with a combined balance sheet of about Rs 17.87 lakh crore.

The transaction is expected to be completed by the second or third quarter of FY24. Once the deal is effective, HDFC Bank will be 100 % owned by public shareholders, and existing shareholders of HDFC will own 41 % of the bank, the companies said in a pre-market filing.

The announcement triggered robust buying in these two counters as well as other banking and financial stocks. FMCG, IT and metal stocks too saw heavy demand.

The 30-share BSE Sensex darted up 1,335.05 points or 2.25 % to close at an over two-month high of 60,611.74.

Likewise, the broader NSE Nifty jumped 382.95 points or 2.17 % to 18,053.40.  HDFC Bank and HDFC led the Sensex gainers’ chart, advancing 9.97 % and 9.30 %, respectively.

The other gainers included Kotak Bank, HUL, L&T, IndusInd Bank, Sun Pharma and Tata Steel. Only two names closed in the red — Infosys and Titan, slipping up to 1.05 %.

“The merger of HDFC with HDFC Bank is an unprecedented mega-merger which will benefit all stakeholders. The shareholders of both entities stand to benefit substantially, as already reflected by the sharp up moves in their stock prices. For shareholders, this is far better than a buyback at higher prices.

“This mega-merger will correct the recent underperformance of the HDFC twins. From the valuation perspective, the HDFC twins are even now only attractively priced in a highly valued market… The Indian economy will benefit from larger investment by the merged entity in large infra projects. India will have a large global bank,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Ajit Mishra, VP – Research, Religare Broking Ltd, said, “The surprise news of the HDFC Bank-HDFC merger has boosted the sentiment amid mixed global cues and we may see the rub-off in the following session as well.”

All BSE sectoral indices mustered gains, led by finance (4.25 per cent), bankex (3.45 per cent), power (3 per cent), utilities (2.93 %) and capital goods (1.79 %).

In the broader markets, the BSE midcap and smallcap gauges gained as much as 1.68 %. World equities made cautious gains amid talks of more sanctions against Russia in response to its invasion of Ukraine.

Elsewhere in Asia, bourses in Tokyo, Seoul, Hong Kong and Shanghai closed in the green. Stock exchanges in Europe were largely trading higher in mid-session deals.

Meanwhile, international oil benchmark Brent crude declined 1.05 per cent to USD 103.29 per barrel.

The rupee started the financial year 2022-23 on a bullish note and settled 21 paise higher at 75.53 (provisional) against the US dollar on Monday. Foreign institutional investors (FIIs) were net buyers in the capital markets as they bought shares worth Rs 1,909.78 Cr. on Friday, as per exchange data.