Bank stocks shine ahead of RBI meet

Mon, 24 Jan Closing

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In anticipation of the RBI's monetary policy meet tomorrow, most sectors other than banking failed to find investor favour today. The benchmark indices made some inroads into the positive territory in the latter half of the session. While the BSE-Sensex closed higher by around 144 points (up 0.8%), the NSE-Nifty closed higher by 47 points (up 0.8%). The BSE Midcap and the BSE Small cap indices notched gains of 0.8% each. The BSE Bankex was amongst the biggest gainers (up 2.4%) today.

As regards global markets, most Asian indices closed mixed today, while European indices have opened in the positive. The rupee was trading at Rs 45.61 to the dollar at the time of writing.

ICICI Bank declared a good set of results for the quarter and nine month ended December 2010. The bank recorded 31% YoY growth in profits for the quarter while net interest margins were maintained at 2.6%. The bank's fee income was up 14% YoY. While the bank's capital adequacy ratio at 20% provides sufficient headroom for growth, the net NPA ratio at 1.2% is still amongst the highest in the sector. The NPA ratio has, however, declined from 2.2% in 3QFY10. The stock along with peer SBI found investor favour today.

Home decorative paints major Asian Paints has outlined plans to enhance its 14-year relationship with PPG Industries Inc. the latter is one of the world's leading coatings and specialty products company. Asian Paints plans to have another joint venture with PPG to accelerate growth of the non-decorative coatings businesses. The company's management expects demand conditions to remain stable for decorative paints across the country. Nonetheless, demand for industrial paints is still lagging and the situation is expected to improve gradually over a period of time. The company has outlined capex of Rs 2.5 bn in FY11 and is on track to achieve it. However, rising raw material cost continues to be the major concern.

Telecom major Bharti Airtel plans to launch 3G wireless services across all its 13 telecoms zones in India by March 2011. The company expects the premium offering to help stabilise its average revenue per user (ARPU). Bharti hopes to cover 40 cities by March, and expand the services to 1,500 cities and towns by FY12.

The 3G services are expected to boost mobile carriers' data revenue in a market where low-margin voice calls account for close to 90% of the total revenue. Voice call prices plunged in India after a price war in the fiercely competitive Indian mobile market of 15 carriers. Bharti's monthly ARPU in India in 1HFY11 fell 20% YoY to Rs 202 (USD 4.4). Its rivals Reliance Communications and Tata Teleservices have already started offering 3G services in some circles.