People's Bank of China buys 1% stake in HDFC Ltd, picking up 1.75 crore shares

In a major boost to India's largest housing finance lenders - HDFC Ltd, the People's Bank of China (PBoC), on Sunday, has bought a 1% stake in HDFC. This investment amounts to  1.75 crore shares in HDFC, which has reportedly been facing a receding trend in its shares since January. Reports state that the share purchase is likely to have happened between January and March. HDFC shares closed at Rs 1,701.95 on April 10, as per market reports.

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HDFC's market woes

With the receding demand in real estate and the extended lockdown due to Coronavirus, HDFC has been seeing a slump in the last quarter of FY 19-20. Reports state that HDFC shares have fallen 32 percent from its 52-week high of Rs 2,499.65 on January 14, 2020. Incidentally when the market indices - Sensex ended FY-20 losing over 1200 points and Nifty lost 340 points, HDFC's shares too tanked inspite of Life Insurance Corporation of India (LIC) increasing its holding in HDFC Ltd to 4.67% in the previous quarter.

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Sensex tanks and then soars

Experts state that Nifty is down 30% from its recent record high of 12,430 hit on January 20, as almost 45 of the Nifty 50 companies have hit their multi-year low amid the global pandemic COVID-19. Moreover, reports state that 90% of the companies hit their 52-week low in March as India saw the rise in cases and record drop in demand. Recently, with the lifting of restrictions on the export of 24 pharmaceutical ingredients and medicines made in India, markets soared momentarily as several countries placed large orders for several API drugs of which India is the biggest manufacturer.

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Coronavirus hits global economy

The fear of the virus has disrupted business supply chains, while the number of positive cases has hit 17,90,233 cases and 1,09,654 deaths. Moody’s have estimated that coronavirus has increased the risk of a global recession as advanced countries United States, Japan, Germany, Italy, France, Britain, and Korea battle the virus, but the UN has claimed that India and China may be spared. Analysts have said that as China is the largest supplier of raw materials and manufacturing hub for different industries - core industries like automobiles, metal and pharmaceuticals' trade were brought to a standstill due to China closing off its borders, but now is seeing action as China picks up manufacturing. Currently, US which is the epicenter of the pandemic has extended its social distancing restrictions till April 30.

Coronavirus LIVE Updates: Five states extend lockdown till April 30; total cases at 8356