The BSE-Sensex is up by 48 points while NSE-Nifty is trading 10 points above the dotted line. However, BSE Midcap and BSE Small cap indices are down by 0.4% and 0.1% respectively. The rupee is trading at 44.95 to the US dollar.
Banking stocks are trading weak led by United Bank of India and UCO Bank. As per a leading financial daily, SBI's pension liability stands at Rs 117 bn as on March 2011. This follows the rise in wages as per the Ninth Bipartite Settlement and the proposed amendment to the SBI pension fund rules. The PSU bank has made an additional provision to account for the same to the tune of Rs 79 bn. This is in excess of the required amount of Rs 37 bn. It has also provided for gratuity liability of Rs 19.7 bn. The banking company's net profits slipped by 10% YoY in FY11 and by 99% YoY in 4QFY11. This was mainly on account of rise in the wage cost. However, the net income grew by 15% in FY11 and NIM (Net Interest Margin) moved up from 2.7% in 2010 to 3.3% in 2011.
Hotel stocks are trading lower led by Oriental Hotels and Country Club. As per a leading financial daily, with hotels expanding at a clip of 20-25% YoY per year, the hospitality industry has been hit by manpower shortage. As per a Deloitte report, there are at least 400 hotel projects with 70,000 branded rooms expected to come up in the next 2 years. With more projects being announced and room inventory set to double in the next 5 years, demand for trained manpower has gone up dramatically. In fact people in the industry are pegging the short fall in quality people at 30-40%. The concern also is that training provided by various institutes is outdated and requires an upgrade of curriculum. To counter this most of the large hotels chains have started their own internal training programmes. Midterm salary revision and high raises are among ways the hospitality industry is trying to retain talent. However, all this is adding to the cost of operations. According to hospitality research company HVS, India's rank in world tourism arrivals is 41. However, it has the potential to be in the top 20. India today hosts about 5 m tourists annually. This number is expected to climb to 18 m by 2016. India's domestic market is also growing. Last year the country saw 540 m domestic travellers.