Power stocks dampen the markets

Mon, 17 Jan 09:30 am

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Asian markets continue their weak trend from last week and have opened in the red today. Benchmark indices in China (down 2.1%), Indonesia (down 1.1%) and Taiwan (up 0.8%) are the biggest losers. However, markets in Japan (up 0.4%) and Malaysia (up 0.1%) are trading in the positive zone. Indian markets have opened the day in the negative as well. Power stocks are the biggest losers currently.

The BSE-Sensex is trading lower by around 65 points (0.4%), while the Nse-Nifty is down by about 20 points (0.4%). Mid and small cap stocks are trading in the negative as well with the BSE Midcap and BSE Small cap indices down by about 0.4% and 0.2% respectively. The rupee is trading at 45.51 to the US dollar.

Housing finance major, HDFC recently reported its 3QFY11 numbers. Its interest income grew by 16% YoY during the quarter, while net profits were up by 33% YoY. Interest income was driven by a 22% YoY growth in advances. Bulk of the loan growth came from an increase in the individual loans. However, net interest margin declined to 3.8% during the quarter as compared to 4.8% seen during the same period last year. The decline reflects the impact of higher interest rates. Net profits grew by 33% YoY during the quarter. This was aided by higher other income which more than trebled during the quarter. The net profits were also aided by the gain on the sale of the 10% stake in IL&FS. The company was comfortably placed in terms of asset quality. The gross NPAs (non performing assets) stood at 0.5% at the end of the quarter. The capital adequacy ratio stood at 14.1%. The stock of the company is currently trading in the green.

Media stocks have opened the day on a weak note. HT Media, Zee Entertainment and Sun TV are all trading in the red. Zee Entertainment also announced its 3QFY11 results last week. Its sales grew by 55% YoY while net profits were up by 11% YoY during the quarter. Sales grew on the back of a 62% YoY growth in advertising revenues. These were aided by higher channel shares across network, a buoyant macro environment and a continued preference of advertisers towards television. Zee's subscription revenues grew by 14% YoY during the quarter. This was on the back of an increase in subscription from domestic cable operators during the period. Operating margins declined from 30% in 3QFY10 to 27% during 3QFY11. This was on account of higher programming expenses. The current quarter results included the performance of the merged regional entertainment channels, which was not there during the same period last year.