While sentiments across key Asian markets were buoyant today, anxieties over the earning season weighed heavy on Indian indices that slipped into the red after a positive start. The BSE Sensex closed lower by around 190 points (down 0.9%) and the NSE Nifty lost around 56 points (down 0.9%). The BSE Midcap and the BSE Smallcap also lost around 0.4% each. Profit booking was largely seen in telecom and power stocks.
As regards global markets, most Asian markets except India, Singapore and Malaysia closed higher today with Japan leading the gainers. European indices have opened on a mixed note. The rupee was trading at Rs 44.13 to the dollar at the time of writing.
Short term liquidity is expected to get skewed in the banking sector next week, following the payment of Coal India IPO proceeds to the few banks arranging the issue. The leading bankers to the issue are SBI, HDFC BankICICI Bank, Axis Bank, Central Bank and Union Bank. While these banks will derive the benefit of the float for a temporary period, the liquidity pressure is expected to pressurize call money rates. Meanwhile the RBIís intervention in the banking system may also be required due to fluctuations in the currency market.
Leading private sector bank Axis Bank reported the results for the second quarter and first half of FY11 today. The bank grew its net profit by 38% YoY in 2QFY11 backed by 41% YoY growth in net interest income. The bankís advances grew by 36% YoY well ahead of the expected industry average. The net interest margins (NIMs) also came in very healthy at 3.7% as against 3.5% in the corresponding quarter of FY10. However they were 0.2% lower than that in 1QFY11. Net NPA to advances ratio also remained stable at 0.34%.The bank restructured loans aggregating Rs 0.6 bn during the second quarter.
Tobacco major VST Industries also came out with its 2QFY11 numbers. The companyís sales for 2QFY11 grew by 35% YoY. Operating income (EBITDA) grew by 57.5% YoY as a result of sharp decline in other expenditure (as a percentage of sales). The net profits grew by 40% YoY as a result of higher operating income partly offset by increase in effective tax rate. Bottomline for 1HFY11 grew by 1.9% YoY while the net profit margin fell by 2.3% to 14.7%. This fall comes on the back of lower operating income as well as fall in other income.