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Signs of strength after the morning lull
Thu, 28 Oct 01:30 pm

After a sluggish morning session which saw the indices hovering close to the dotted line, the index stocks seem to have picked up some strength. Most stocks in the benchmark indices are trading mixed with stocks from the auto and IT space leading the gains. However, realty and metal stocks are in the red.

Currently, the BSE-Sensex is trading up by around 92 points (0.46%), while the NSE-Nifty is up by about 28 points (0.46%). The BSE-Midcap index is trading flat while the BSE-Smallcap index is trading higher by a marginal 0.25%. The rupee is trading at 44.49 to the US dollar.

Bajaj Electricals has announced its September quarter results. The company has reported a 16% growth in topline and a 20% fall in bottomline on a YoY basis. The Consumer Durables segment, which comprises nearly 50% of the company's revenues grew at a robust 32%, the lighting segment grew at 10% while the Engineering & Projects (E&P) segment remained flat. Only the consumer durables segment posted a profit growth of 27% whereas the other segments declined in their profitability considerably. The fall in margins was largely because of the E&P segment. There was a lot of pressure on the margins due to high input cost for the Commonwealth Games and other projects which were very time line based.

NBFC stocks are mainly trading mixed with Shriram Transport Finance and Srei Infra Finance leading the gains. PFC and LIC Housing were however trading weak. Shriram Transport Finance recently announced its 1HFY11 results. Interest income grew by 23% YoY in 1HFY11 on the back of 23% YoY growth in assets under management. Net interest margins improved to 8.2%, from 6.9% 1HFY10; with lesser pressure on loan yields. Incremental lending was skewed towards pre-owned vehicles (trucks), in line with the company's forte.  Net profits grew by 58% YoY in 1HFY10 aided by low interest expenses, and a jump in other income. STFC's cost to income ratio remained benign at 24% in 2QFY11 (22% in 2QFY10) due to its operating leverage. The company added 682 new employees in the quarter and thus employee costs rose sharply by 74% YoY in 2QFY11. Net NPA ratio declined from 0.7% in 1HFY10 to 0.5% in 1HFY11. The institution also sustained robust return on equity of 28%.

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