Markets had a field day today, showing a strong performance. They were trading on a firm note on the back of a good quarterly performance by IT biggie TCS. The rest of the IT pack was also pulled upwards on the back of its strong results. While the BSE-Sensex closed higher by around 210 points (up 1.1%), the Nse-Nifty closed higher by 69 points (1.2%). This was a big change from the either flat or negative sessions witnessed in the past few trading days. The BSE Midcap and the BSE Small cap could not replicate the large caps' strong performance and were trading higher by 0.5% and 0.3% respectively. IT and metal stocks found strong investor favour. But oil and gas and power stocks did not evince much interest.
India was one of the strongest performers among Asia's major markets. European indices have all opened in the green. The rupee was trading at Rs 45.44 to the dollar at the time of writing.
The government may just fall short of its Rs 400 bn divestment target on the back of some hanky-panky by big name merchant bankers. SAIL recently called off its investor road-shows for its Rs 65 bn follow on public offer (FPO). Bankers like SBI Capital Markets, HSBC, Deutsche Bank and Kotak Mahindra Capital may be stripped of their mandate for the FPO. These banks were also involved in the Rs 35 bn follow-on offer of Tata Steel, the biggest rival of SAIL. This is a huge conflict of interest for the investment banks involved.
Of the six hired for the SAIL issue only JP Morgan and Enam Securities were not involved in the rival Tata Steel issue. The state-run steel major has already sent 'showcause' notices to these banks. They will need to explain why they took up an FPO of a competing steel company when the first mandate was alive, during a similar period. Anyway, with the Sensex being extremely volatile in the past few months, further IPOs and FPOs may be deferred till the market uncertainty reduces to an extent.
The Banking Index closed positive today with Axis Bank being one of the top performing stocks on the back of its impressive 3QFY11 results declared yesterday. The company reported a whopping 37% growth in net interest income on a 46% advance growth. Even in a period of tight liquidity the company managed to put out very impressive credit growth. The growth in the loan book was nearly 2 times the average sector growth. Profits grew by 35% in 9mFY11 due to the above reasons. Its net interest margins (NIMs) however fell slightly to 3.8% from 4% previously on higher cost of funds. The bank continued to stamp its all India presence through 1,120 branches and 5,303 ATMs across 734 cities. During 9mFY11, the bank added 137 branches and 91 ATMs. Net NPAs (non performing assets), as a percentage of advances, saw a marginal improvement in the quarter and stood at 0.3%. However, the management cited concerns over possible delinquencies in the restructured assets.
Medical equipment manufacturer and distributor Opto Circuits displayed a spectacular performance in 3QFY11 (Oct-Dec 2010). Its consolidated revenues grew by 63% YoY during the quarter. Operating profits increased 39% YoY during the period. On the flip side, however, margins declined by 4.9% due to increase in overall expenditure as a percentage of sales. Bottomline increased 46% YoY in 3QFY11 due to increase in other income, compared to a loss in the corresponding period last year. This was offset by higher depreciation and tax expenses. The stock closed up over 10% today.