HDFC recovered smartly from its lower levels on Friday following good buying support.

By 12:50 IST, the scrip of the housing finance major was up marginally by 0.26% at Rs 368.90 on the BSE, recovering sharply from a low of Rs 365.05. A volume of 70,415 shares was recorded on the counter.

Meanwhile, the BSE Sensex stood 39.21 points lower at 3,151.14. In five sessions, the Sensex shed 132.52 points, or 4.03%, from 3,283.66 on 28 February 2003.

The Housing Development Finance Corp scrip, in the same period, lost 1.62% from Rs 375 on 28 February 2003. Earlier, in six months, the scrip rose by 33% to the current level from Rs 277.50 on 26 August 2002.

The HDFC scrip witnessed defensive buying support today. Dealers said that during uncertain times, players shift their focus to defensive sector stocks like HDFC, which is considered to be a safe bet.

Meanwhile the Union Budget 2003-04 has also been favourable for HDFC, retaining all the tax benefits for the housing finance sector. Earlier, in its final report on 27 December 2002, the Vijay Kelkar committee had suggested that tax sops for the sector should be continued, albeit in a diluted form. The panel recommended reduction in rebate on interest payment on housing loans from Rs 1,50,000 to Rs 50,000. It also recommended a 2% interest subsidy on housing loans up to Rs 500,000. But the Centre rejected the recommendations of the Kelkar committee, continuing with the tax exemption for housing loans.

Recently, HDFC's board of directors approved a proposal to undertake the business of insurance broker and agent and, in this connection, approved the filing of an application to the Insurance Regulatory and Development Authority for obtaining a composite corporate agency licence.

Meanwhile, analysts are confident that the company will show outstanding growth in the future. They said the company may maintain a growth in the range of 25-35%, but may lose some market share due to tough competition from ICICI Bank, State Bank of India etc.

For the third quarter ended 31 December 2002, HDFC registered a 21% rise in net profit to Rs 146.65 crore (Rs 1.46 billion) on a 11% increase in total income to Rs 740.13 crore (Rs 7.4 billion).

BSE code: 500010