India Markets Monday Wrap-Up: Indices Come Off Day's Highs

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 |  Includes: EPI, IFN, IIF, INDY, INR, PIN, SCIF, SCIN
by: Equitymaster

Indian stock markets opened the day on a strong note today. However towards the middle of the session, the indices came off the day's highs. The latter half of the session saw the indices reach breakeven levels. But, in the final hour, investors resorted to buying at lower levels and this pushed the indices above the dotted line. While the BSE-Sensex closed higher by around 102 points (up 0.6%), the NSE-Nifty closed higher by around 36 points (up 0.7%). The BSE Mid cap and the BSE Small cap also did well to notch gains of 1.3% and 1.4% respectively. Gains were largely seen in realty and capital goods stocks.

As regards global markets, Asian indices closed mixed today while European indices have opened in the red. The rupee was trading at Rs 49.06 to the dollar at the time of writing.

Power Finance Corporation recently announced its results for the third quarter and nine month period of the financial year 2011-12. Income from operations rose by 27% YoY during 3QFY12 and 24% YoY for the nine month period on the back of a similar growth in advances (28% YoY). The net interest margin decreased marginally to 3.9% in 9mFY12 from 4.1% in 9mFY11. The bank saw some margin pressure on account of the aggressive rate hikes by the Reserve Bank of India (RBI).

The institution's net NPA (non performing assets) to advances increased to 0.54% at the end of 9mFY12, compared to 0.01% in 9mFY11 and 0.23% in 1HFY12. The deterioration in asset quality was on account of the Konaseema Gas Power project which defaulted on payment on account of fuel supply issues. PFC's bottom line expanded by 10% YoY in 9mFY12 due to exchange rate losses, lower other income and pressure on NII (net interest income). However for the 3QFY12 profits were up 68% on forex gains. This was mainly on account of a change in accounting policy which allows for the amortization of forex gains/losses over the balance sheet period of the borrowings. The board also declared an interim dividend of Rs 5 per share. On buoyant quarterly results the stock closed the day 5% higher.

FMCG behemoth, Hindustan Unilever Limited continued with its robust profitable growth in the December 2011 quarter. Its sales grew by 16.4% YoY led by 18.2% YoY jump in Home & Personal care business and 12.7% YoY increase in Food business. The food business growth was dragged down by 12% erosion in sales from packaged food segment even as the beverage segment grew by 11.3% on a YoY basis. Exports, which form 5% of overall sales, fell by 13.8% during the quarter. The company's operating margin expanded by 2.2% to 16.3% aided by a 7% cut in advertisement spends. This coupled with lower other expenditure more than offset the increase in raw material costs (as a proportion to sales). However at the net level, margins improved by a mere by 30 basis points to 12.7% on account of the restructuring costs of Rs 123.8 m charged during the quarter. The company had earned an exceptional income of Rs 642.9 m in the year-ago quarter. The stock closed the day 3.5% lower post announcing its financial results.