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Realty & power erase early gains
Tue, 18 Jan 11:30 am

After starting today’s session on a positive note, Indian indices have relinquished early gains but continue to trade in the green. Other key Asian markets are trading in the positive territory as well. Currently, heavyweights in the Sensex are trading firm with stocks from the IT and consumer durables’ space witnessing strong buying interest. However, realty and power stocks are trading weak.

Currently, the BSE-Sensex is trading up by around 90 points, while the Nse-Nifty is up by about 25 points. There has been some buying interest amongst the mid and small cap stocks as well with the BSE Midcap and BSE Small cap indices registering gains of 0.25% and 0.47% respectively.

Construction stocks are trading flat with Supreme Infrastructure and Madhucon Projects leading the gains. However, HCC and IVRCL Infrastructures are trading weak. The environment ministry has finally submitted its report on Lavasa, a subsidiary of HCC. The report confirms that there have been gross environmental violations at the proposed hill city project. It may be noted that post the show cause notice issued on 25 November 2010 to stop the construction of the township due to environmental concerns, a special committee was formed to assess the on ground situation and submit a final report over it. And now since the report confirms environmental violations on the company’s behalf the future of the project appears to be uncertain. Nonetheless, one has to wait for the final draft report to be published today so as to get a detailed review on the intricacies of violations so as to arrive at a meaningful conclusion regarding future deliveries.

Finance stocks are trading firm led by LIC Housing and Mahindra Finance. Power Finance Corporation (PFC) declared its 9mFY11 and 3QFY11 results. For 9mFY11, the company’s net interest income grew by 26.4% YoY on the back of sharp increase in advances. Bottom line grew by 14.6% YoY as a result of exchange rate loss, lower other income and higher tax outlay. Net interest margin declined marginally from 4.2% in 9mFY10 to 4.1% in 9mFY11.

For 3QFY11, net interest income grew by 26% YoY, while profit after tax increased by 16.9% YoY. The bottom line was negatively affected due to exchange rate loss during the quarter. At the end of 3QFY11, gross NPA to advances remained negligible at 0.01%. Capital adequacy ratio at the end of the quarter stood at 17.3%.

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