Indian Markets: Gains In the Second Half Save the Day

by: Equitymaster

Though markets closed in the red, the benchmark indices pared its losses during the final hour of trading as buying activity intensified. While select stocks from the realty and energy sectors garnered investors' interest, stocks from the FMCG and auto space remained at the receiving end.

The losers outnumbered gainers in a ratio of 3.7 to 1 on the BSE. As regards global markets, the Asian indices closed in the red, the European indices are witnessing negative trend currently.

The BSE Sensex closed almost 200 points lower and the NSE Nifty closed lower by 52 points lower. The BSE Mid Cap and Small Cap indices also closed in the red, down by 4% and 4.5% respectively. The rupee was trading at 50.22 to the dollar.

Mirroring its global peers, Indian bourses opened the day's proceedings on a subdued note. The markets witnessed heavy selling in early hours of trade and the benchmark indices declined more than 10% during the noon session.

However, the downslide got arrested during the afternoon session and markets gained some ground as buying was witnessed at lower levels. It however, closed below the dotted line. While Bharti Airtel (up 9%) and Reliance (up 6%) were the key gainers, M&M (down 17%) and Tata Motors (down 14%) were key losers.

Sun Pharmaceutical announced its results this weekend. The topline grew by a robust 76% YoY during 2QFY09 led by a healthy 20% YoY and 174% YoY growth in domestic and export formulations respectively. The operating margins improved by an impressive 12.9% YoY during the quarter.

This improvement can be attributed to a substantial fall in all expenses (as percentage of sales). The bottom line of the company grew by 135% YoY due to the strong performance at the operating levels and higher other income. While the stock closed lower by 8%, its peer Lupin ended 2% higher.

SBI announced its result today. The bank registered growth of 29% YoY in 1HFY09 in its interest income, on the back of 38% YoY growth in advances. The net interest margins improved to 3.2% due to higher proportion of CASA (current and savings account).

The total delinquency in international business was in the tune of Rs 1.5 bn. The provisions increased nearly 8 fold (781% YoY) due to investment provisions, provisions for wage revision and pension fund. The cost to income ratio fell sharply to 46% in 1HFY09 from 55% in 1HFY08. The capital adequacy ratio was at 11.5% at the end of 1HFY09 and net NPAs stood at 1.3% (1.4% in 1QFY09). While the stock of SBI closed lower by 10%, its peers PNB ended down 6% and BOI closed 11% lower.