After remaining range bound all morning, the indices showed some strength during the post noon session following strong buying interest in index heavyweights. Stocks from the realty and banking spacer are trading firm, while stocks from the capital goods and IT space are trading weak.
The BSE-Sensex is up by 60 points, while Nse-Nifty is trading 10 points above the dotted line. BSE Midcap and BSE Small cap indices are both up by 0.83 and 0.81% respectively. The rupee is trading at 45.35 to the US dollar.
Banking stocks are mostly trading firm led by Yes Bank, Kotak Bank, Federal Bank and DCB. However, ING Vysya Bank, IndusInd Bank and HDFC Bank are trading weak. Earlier when interest rates were falling, it was prepayment charges on home loans that hurt bank customers. Now, a spike in returns offered by term deposits has raised the issue of penalties on premature withdrawals. HDFC Bank, which earlier allowed depositors to redeem deposits without a penalty, has said that it will change its rules now. The penalty on premature closure of FDs has been fixed by the bank at the rate of 1%. This will be applicable with effect from 24th January 2011.
Incidentally, the RBI is expected to raise interest rates on January 25 when it announces its monetary policy for the third quarter. Several public sector banks like SBI, have a premature withdrawal charge. A few like Axis Bank and IDBI Bank continue to maintain that they will not impose any penalty on premature withdrawals. However, in case of premature withdrawal, the depositor will not get the interest for the original period but for the period the deposit has actually run.
Pharma stocks are currently trading firm led by Glenmark Pharma, Torrent Pharma and Cadila Healthcare. The stock of pharma major Cadila Healthcare is trading firm on the back of the company posting strong results for the quarter ended December 2010. The company reported a topline growth by 18% YoY during the quarter. Growth was led by both the domestic and exports businesses. While the exports formulations business grew by 20% YoY this quarter, the domestic formulations business grew by 17% YoY. At the operating level, the company posted a profit growth of 22% YoY. Operating margins during the quarter improved by 0.8% on the back of a fall in other expenditure (as percentage of sales). A lower interest outgo and flat depreciation charges led to the company's profits to rise by 26% YoY.
As for the company's performance during the nine month period ended December 2010, revenues and profits rose by 20% YoY and 38% YoY. Profit growth was higher on the back of 1.6% YoY expansion in operating margins and lower interest costs leading to a 29% YoY increase in operating profits.