India Markets Tuesday Wrap-Up: Tech Blue-Chips Top Gainers

by: Equitymaster

After a brief stint in the negative territory during early trades, the benchmark indices in Indian stock markets managed to move above the dotted line and close comfortably higher today. There was significant buying interest in software, power and auto stocks. While the BSE-Sensex closed higher by around 111 points (up 0.7%), the NSE-Nifty closed higher by around 22 points. The BSE Mid cap and the BSE Small cap ended flat in today's trade. Select stocks in engineering and cement space witnessed heavy profit booking.

As regards global markets, Asian indices ended higher today while European indices have also opened weak. The rupee was trading at Rs 52.76 to the dollar at the time of writing.

Software major Tata Consultancy Services has announced the fourth quarter results of financial year 2011-2012 (4QFY12). The company has reported a 0.4% quarter-on-quarter (QoQ) growth in its sales and a 1.6% QoQ increase in its net profits. The growth in net sales was largely driven by a good growth in volumes which was 3.3% QoQ during the quarter. For the year ended March 2012 (FY12), sales grew by 31.0% Year-0n-Year (YoY). This came on the back of a 23% YoY growth in volumes and 1.3% YoY increase in average realization during the year. The growth in revenues was 2.3% QoQ on constant currency basis. In terms of US dollar revenues, the growth in sales was 2.4% QoQ during the quarter.

Operating margins declined by 1.6% QoQ to 27.7% during the quarter as compared to 29.2% seen during the previous quarter (ending December 2011). This was mainly due to higher selling, general and administrative expenses (as a percentage of sales). For FY12, margin at operating level was slightly lower at 27.6% as compared to 28.1% in the same period last year. TCS added a net of 11,832 employees during 4QFY12 and 39,969 employees during the fiscal. The attrition rate stood at 11.1% in IT services segment, lower than the 11.7% seen during the previous quarter (3QFY12). In the BPO segment, attrition came down to 21.6% as compared to 22.6% seen during 3QFY12. The stock gained nearly 13% in today's trade and featured amongst the top gainers on the benchmark indices.

HDFC Bank (NYSE:HDB), one of the country's largest private sector banks, has inked a pact with US based Wells Fargo (NYSE:WFC) bank to enable US-based NRIs to remit funds online or through phone to their beneficiaries in India. HDFC Bank, which tries to model its business on the lines of Wells Fargo, has been trying to enhance fee based contribution. The bank has been able to grow its fee income base by 24% YoY in FY12. However, the proportion of fee to total income dropped to 23% as against 25% in FY11. Further, the gain on the fee income side has been eroded by the losses on revaluation and sale of investments due to higher bond yields, the absence of which would have otherwise aided the bank's other income.

Despite a relatively muted growth of 22% YoY in loan book, HDFC Bank completed the latest fiscal (FY12) showing no other signs of pain. However, with its customer base nearing 22 m, HDFC Bank managed to once again outpace the industry average. Backed by more than 25% YoY growth in loans to retail customers, the bank has managed the balance sheet expansion.