After last week's weakness led by the Chinese interest rate hike, Asian markets have opened this week on a positive note. Stocks across China, Hong Kong and Singapore are trading with gains currently. As for the Indian markets, these have also opened in the positive today. Here, metal and realty stocks are leading the gainers pack currently.
Currently, the BSE-Sensex is trading higher by around 115 points (0.6%), while the NSE-Nifty is up about 35 points (0.6%). Mid and small cap stocks are also following suit with the BSE-Midcap and BSE-Smallcap indices trading higher by around 0.8% each. The rupee is trading at 44.41 to the US dollar.
Stocks of financial companies have opened largely in the positive today. Key gainers here include Mahindra Finance, IDFC, and HDFC. Leading tractor and vehicle financing company, Mahindra Finance, announced its 2QFY11 results late last week. The company recorded a 35% YoY growth in its interest income during the quarter. This was backed by a 35% YoY growth in advances. The company's assets under management grew by 32% YoY during the quarter. What is more important is that the company's net NPAs to total advances declined to 1.1% at the end of the first half (1HFY11), from 2.8% previously. Anyways, the company faced some pressure on its net interest margins, which declined from 6.0% in 1HFY10 to 5.5% in 1HFY11 due to higher interest costs. It still managed to clock a strong 72% YoY growth in net profits during the quarter.
The management of Mahindra Finance is now betting big on its rural housing finance business run through a subsidiary. It in fact sees its balance sheet to touch a size of around Rs 50-60 bn over the next 3-5 years. The company is also looking to grow its insurance business, which almost doubled its profits (though on a low base) in 1HFY11. In terms of its core business of vehicle financing, apart from aiming to maintain its leading position in lending for Mahindra group vehicles, the company is also looking to focus on financing of commercial vehicles, construction equipments, and second-hand vehicles.
Stocks of auto ancillary companies are trading strong currently, led by Bharat Forge, NRB Bearings, and Exide. Gains in Bharat Forge are on the back of a strong set of numbers announced by the company for 2QFY11 late last week. Its total sales have grown by 67% YoY during the quarter, while its net profits have surged by a whopping 154% YoY. But the operating margins were dampened by the higher material prices. Anyways, the company's management is confident that margins would revive in the coming quarters. The company is seeing a recovery in demand and has seen its order book at a comfortable position of Rs 18 bn as at the end of September 2010. The benefits of this will start to flow into the company over the next couple of months. The management also expects Bharat Forge's exports to North America to increase by 30-35% in 2011.