HDFC managed a new 52-week (Rs 392) high in intra-day trades on Monday as insurance companies reckoned that the budget would be pleasing to the housing sector.

By 14:15 IST, the scrip of Housing Development Finance Corporation was still higher by 4.20% at Rs 390.90. It recorded volumes of 69,741 shares on BSE by then. In 31 sessions between 26 December 2002 and 7 February 2003, the scrip of HDFC rose 7% to Rs 375.15 from Rs 350.35.

As per market talk, Indian insurance companies were active on the counter today. They seemed to be building positions on the stock ahead of the Union Budget for 2003-04, expected to grant the housing sector in general, further sops . In the last three years, the housing sector has witnessed a 25% growth.

Not only will the budget be productive for the housing sector, it is reckoned, but it is expected that certain Kelkar Panel recommendations restricting sops to the housing sector will not be implemented.

In its final report on 27 December 2002, the Vijay Kelkar Committee, suggested that tax sops for the housing finance should be continued, albeit in a diluted form. The panel has recommended reduction in rebate on interest payment on housing loans from Rs 1,50,000 to Rs 50,000. It has also recommended a 2% interest subsidy on housing loans up to Rs 5,00,000.

Recently, HDFC's board of directors have approved a proposal to undertake the business of insurance broker and agent and, in this connection, approved the making 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 future. They say the company may maintain a growth in the range of 30-35%, 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