After starting today’s session on a negative note, Indian indices continued to languish in the red in the previous two hours of trade. Other key Asian markets are also trading weak with both the Nikkei and Hang Seng in the red. Currently, heavyweights in the Sensex are trading mixed with stocks from the banking and metals space bearing investors’ brunt. However, oil & gas and IT stocks are trading firm.
Currently, the BSE-Sensex is trading down by around 23 points, while the NSE-Nifty is down by about 14 points. However, there has been some buying interest amongst the mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.4% and 0.2% respectively. The rupee is trading at 44.31 to the US dollar.
Buoyed by strong response from the ongoing Coal India IPO, the government plans to sell stakes in three more PSUs namely SAIL, IOC and ONGC as a roadmap towards achieving the disinvestment target of Rs 400 bn by March 2011. Follow on offer of these companies are expected during the first quarter of the next calendar year. The government plans to offload 5% in ONGC and 10% in IOC to raise about Rs 210 bn. SAIL’s FPO is expected to garner about Rs 80 bn. Other companies which are on the disinvestment radar include Power Grid Corporation, which is expected to come out with a share sale after Diwali. This will be followed by Manganese Ore India, SCI and Hindustan Copper. The government is expected to complete all these offers by December.
Banking stocks are mainly trading weak with Allahabad Bank and Indian Overseas Bank leading the losses. HDFC Bank recently announced its 1HFY11 results. Interest income grew by 14% YoY in 1HFY11 on the back of 38% YoY growth in advances. Its advance growth was higher than the overall sector growth. Its net interest margins remained stable at 4.2%. Other income fell by 19% YoY in 1HFY11 due to lower treasury gains due to revaluation and sale of investments. Fee income however, was up 16% YoY. On the back of higher net interest income, the bank saw a net income increase of 33%. It improved asset quality, even with higher loan growth as net non-performing assets (NPA) to advances improved marginally from 0.5% in 1HFY10 to 0.3% in 1HFY11. The capital adequacy ratio (CAR) stood at a comfortable at 17%, (Tier I CAR at 12.7%) at the end of 1HFY11.