Markets opened marginally higher on Tuesday with the benchmark Nifty reclaiming the 8,000 mark led by financials. However, traders are likely to remain cautious ahead of the two-day FOMC meet which begins today.

At 9:35AM, the 30-share Sensex was up 99 points at 26,852 and the 50-share Nifty was up 25 points at 8,017.

RBI is keen that all large financial institutions lend themselves to greater regulation by turning into a bank as, globally, non-bank players in finance are seen to be engaged in shadow banking.

The last of non-government financial institutions is HDFC, the largest housing finance company. But unlike other institutions that received a bank licence — ICICI, IDBI and now IDFC — HDFC is neither constrained for resources nor for growth opportunities.

HDFC Bank Ltd seems to have squeezed the towel dry, at least for now. Net interest margin for the September quarter was 4.5%, close to a historic high. The bank’s return on asset of 2.01% (annualized) is again at a 14-year high. The lender has been tight with its operating expenses, but that can only take you so far.

With new branches necessary for growth, cost-to-income ratios will inch up. Operating expenses rose close to one-fifth in the September quarter after four quarters of single-digit growth rates. Thus, it follows that profit growth would tend to closely follow loan growth.

HDFC Bank Ltd, India's second-biggest private sector lender by assets, on Tuesday reported a 20% rise in quarterly net profit, lagging estimates, due to higher tax expenses and provisioning for loan losses.

Net profit rose to Rs 2,381 crore in the quarter ended September 30, 2014, from Rs 1,982 crore a year earlier.

Gains in bank shares have lifted the Bank Nifty near its 52-week high on expectations of more reforms to push the economy on the growth track after Narendra Modi-led BJP emerged as the largest party in Maharashtra, the country's largest industrial State and is poised to form a government in Haryana after acquiring a majority.

State-owned banks which led the Bank Nifty include PNB, SBI, Bank of India, Bank of Baroda and Canara Bank up 1.8-3.5% each.

Shares of India’s third-largest private sector lender, Axis Bank, are trading higher by 1% at Rs 389 on the BSE after it reduced its base rate by 10 basis points (bps) to 10.15 per cent on the back of a decline in cost of funds.

The move comes despite the Reserve Bank of India (RBI) deciding to hold interest rates in the past four policy reviews, the last one being in September.

Foreign institutional investors (FIIs)’ stake in Infosys is nearing historic highs. During the quarter ended September, they bought 6.38 million Infosys shares for Rs 2,236 crore, raising their stake 1.1 per cent, data show. The number of FIIs holding stake in the company has risen from 912 at the end of June to 926 at the end of September. As of September-end 2013, 808 FIIs held stake in the company; the number stood at 778 a year earlier.

Recently, the stock hit a lifetime high. Also, the company announced 1:1 bonus shares to shareholders, including those holding American depository receipts, after a gap of eight years. Life Insurance Corporation of India has increased its stake in Infosys from 3.82 per cent at the end of June to 4.45 per cent in September, acquiring 3.62 million shares (0.63 per cent stake) for Rs 1,270 crore. Retail investors, however, booked profits on every rise, with their holding in the company nearing a decadal low. Individual investors’ stake declined from 9.32 per cent in June to 9.06 per cent in September.

Foreign investors are anticipating a long-pending nod from the Foreign Investment Promotion Board (FIPB) for an increase in foreign investment limit in HDFC Bank, going by the recent narrowing in premiums.

The premium between HDFC Bank's American Depositary Receipts (ADRs) and its local shares have seen a sharp reduction in the past month.

Markets continued to trade weak weighed down by select index heavyweights even as Infosys helped offset some of the losses on the back of better-than-expected earnings.

At 10:20AM, the 30-share Sensex was down 233 points at 26,404 and the 50-share Nifty was down 70 points at 7,891.

Benchmark indices continue to maintain the dismal trend weighed down by HDFC Group shares, ITC and metal stocks.

At 11:45 AM, the 30-share Sensex was down 142 points at 26,426 and the 50-share Nifty was down 47 points at 7,898.

Growth in services activity picked up pace in September as order books filled up at a faster rate, a business survey showed on Tuesday.

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