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Banking stocks lead the rally
Tue, 31 Jan 11:30 am

Indian stock market indices traded strong over the last two hours of trade on the back of heavy buying activity witnessed across industry heavyweights. Oil and gas and Banking stocks witnessed maximum buying interest, while capital goods and Metal stocks witnessed maximum selling pressure.

The BSE-Sensex is up by 165 points, while the NSE-Nifty is up by 55 points. BSE Mid cap index and the BSE Small cap index are up by 0.66% and 0.60% respectively. The rupee is trading at 49.69 to the US dollar.

Hotel stocks are trading in the green led by East India Hotels Ltd. (EIH) and Oriental Hotels. Taj GVK Hotels & Resorts Limited announced third quarter results of financial year 2011-2012 (3QFY12). The company has reported a 5.6% YoY and 52.8% YoY decline in sales and net profits respectively. Both operating profit and operating margin saw a decline of 32% YoY and 11% YoY respectively. This was due to increase in expenditure on a new hotel at Hyderabad. Net sales and net profits for the nine months ended December 2011 declined by 3.4% YoY and 26.3% YoY respectively. During the quarter the company added a new hotel under the Vivanta by Taj brand in Hyderabad. It also plans to develop at least three more properties simultaneously in Mumbai, Bangalore and Hyderabad which will serve under the Ginger brand.

Banking stocks are trading strong led by State Bank Of India (SBI) and Canara Bank. According to a leading financial daily, the government of India (GOI) has agreed to infuse a maximum of Rs 79 bn into State Bank of India (SBI). However no time frame was given as to when the infusion would take place. The actual infusion into the bank in the current year is likely to be less, depending on what the bank needs to achieve a tier I capital adequacy ratio of 8%. The capital infusion would take place by way of preferential allotment of equity shares to the government. Capital infusion will increase the government's stake in the bank to about 66% and the tier I capital adequacy ratio will stand at around 9%, if the bank receives the full amount.

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