India Markets Monday Wrap-Up: Close Brings Markets to Higher Ground

by: Equitymaster

Indian indices had a positive trading session today. Despite a 2.5 hour technical snag on the BSE, the Nifty traded strong. Markets traded well above the dotted line throughout the day, with broad based gains. While the BSE Sensex closed higher by around 323 points (up 1.7%), the NSE Nifty gained around 100 points (up 1.7%). The BSE Midcap and the BSE Smallcap, were also trading strong with gains of around 1.7% and 1.2% respectively. Strong gains were largely seen in the consumer durables and banking space, while oil & gas and metals stocks saw a modest rise.

As regards global markets, major Asian indices closed positive today, with the exception of Japan. European indices have, however, opened on a mixed note. The rupee was trading at Rs 44.42 to the dollar at the time of writing.

Banking stocks continued their uptrend. Continuing with its surge from the previous week ICICI Bank (NYSE:IBN) closed 6% higher today. The bank recently declared its 2QFY11 results. Its interest income fell by 12% YoY, while advances grew by a marginal 2% YoY in 1HFY11. Net interest margin (NIM) improved due to higher CASA proportion (42% of deposits). Operating costs moved up with the cost to income ratio at 41% in 1HFY11 compared to 37% in 1HFY10. Its capital adequacy ratio remained healthy at 20.2% at the end of 1HFY11. Asset quality improved with net NPAs at 1.4% of advances in 2QFY11 (2.2% in 2QFY10). Bottomline grew 18% YoY in 1HFY11 due to lower provisioning costs. This was despite a fall in other income (mainly treasury income).

Metal stocks closed in the positive today with Welspun Corp and Ispat Industries leading the gains. Nalco declared its results recently. Its topline grew by 27% YoY on higher production and sales. Higher aluminium prices (as per London Metal Exchange-LME) also contributed to the growth. Operating profits increased by over 200% YoY. This was led by lower operating costs coupled with higher realizations. Thus, EBITDA margins improved 13% during the quarter to 22.2%. Net profits grew by 40.4% YoY. Net profit qrowth was lower than operating profit growth mainly on account of lower other income, and a big jump in taxes. Bottomline in 1HFY11 grew by 78% YoY on the back of a 33% YoY growth in topline.