Strong earnings buoy Indian indices

Thu, 19 Jan Closing

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Indian stock markets had a strong outing for most part of today's trading session. After opening in the positive, the indices gained momentum as a strong set of corporate earnings for the December quarter helped investor confidence. While the BSE-Sensex closed higher by around 192 points (1.2%), the NSE-Nifty closed higher by around 63 points. The BSE Mid cap and the BSE Small cap also gained around 1% each. While losses were largely restricted to select IT and FMCG stocks, banking and metal stocks were the top gainers.

As regards global markets, most Asian indices closed in the positive today while most European indices have opened strong. The rupee was trading at Rs 50.37 to the dollar at the time of writing.

HDFC Bank announced results for the third quarter and nine month ended December 2011 today. The bank's total income grew by 35.6% YoY during the quarter. Net interest income grew by 12.2% YoY on the back of loan growth of 22% and a net interest margin (NIM) of 4.1% which remained stable on a sequential basis. The core cost to income ratio was at 46.7% as against 46.5% for the quarter ended December, 2010. Portfolio quality remained healthy with gross non-performingassets (NPAs) at 1.0% and net NPAs at 0.2% of advances (1.1% gross NPA and 0.2% net NPA ratios in 9mFY11). Net profit grew by 31.4% YoY and 32% for 3QFY12 and 9mFY12 respectively.

Meanwhile software major Tata Consultancy Services (TCS) also announced a strong set of numbers for the third quarter and nine month ended December 2011. The company saw its topline grow by 13.5% QoQ. This was on the back of steep rupee depreciation and a volume growth of 3.2% during the quarter. Revenues from every geographic concentration witnessed an increase during the quarter. Revenues from Continental Europe and Latin America clocked in the best performance and grew by 18.2% QoQ and 17.3% QoQ respectively. Operating margins expanded by 2.1% QoQ to 29.2% during the quarter as compared to 27.1% seen during the previous quarter (ending September 2011). This was mainly due to lower cost of sales (as a percentage of sales). However for 9MFY12, margin at operating level was slightly lower at 27.6% as compared to 28.0% in the same period last year.

TCS added a net of around 11,981 employees during the December quarter. The company's attrition rate currently stands at 12.8%, lower than the 13.7% seen during the previous quarter (2QFY12). The company also added 40 new clients during the quarter. The total number of active clients at the end of the quarter was 1,003.