Indices lose momentum in final hour

Mon, 4 Feb Closing

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The Indian stock markets started the day on a positive note, but this momentum did not last throughout the session. Profit booking took toll and wiped out the gains in the final hours of trade. The BSE-Sensex closed in the negative, lower by around 30 points (0.15%). The NSE-Nifty closed lower by around 12 points (down 0.2%). The smaller indices had a much worse day on the bourses. The BSE Mid Cap index and the BSE Small Cap 0.8% and 0.7% lower respectively. Most sectoral indices closed in the red today with PSU banks and healthcare leading the losses. On the other hand only auto stocks closed positive.

As regards global markets, Asian indices had a mixed outing today. European indices also opened the day on a mixed note. The rupee was trading at Rs 53.19 to the dollar at the time of writing.

The Indian government is expected to spend Rs 368 bn on IT products and services in 2013, a 10.5% increase over the Rs 333 bn spent in 2012, according to research firm Gartner. This includes spending by government organizations on internal IT (including personnel), hardware, software, external IT services and telecommunications. Telecommunications, which includes telecom and networking equipment and services, is expected to remain the largest overall spending category and is expected to grow 6.8% in 2013 to reach Rs 118 bn in 2013, up from Rs 111 bn in 2012. The software sector is expected to register the highest growth rate of IT spends, increasing 18% in 2013, led by investments in desktop software and infrastructure software. The government aims to invest more than Rs 200 bn in expanding broadband penetration. The electronic chip making project, digitisation of academic databases across educational institutions, vehicle registrations, driving licence databases etc are all expected to be major focus areas. The IT sector is expected to indirectly benefit from government projects like Unique Identification Authority of India (UIDAI), launch of the National Optical Fibre Network and computerisation of commercial taxes in states. Mindtree and Tata Consultancy Services (TCS) have been seeing some project wins in this space.

Leading financier in the infrastructure space Infrastructure Development Finance Company (IDFC) announced its results for the 9 month period ended December '2012. Its consolidated income from operations grew 31% YoY in 3QFY13 and by 28% YoY in 9mFY13, on the back of 22% YoY growth in advances. Disbursements increased by 4.5% YoY, but sanctions fell by 13% YoY in 9mFY13 on account of a slowdown in infrastructure activity. However, cumulatively sanctions were up by 12% YoY. Overall asset management revenues were flat in 9mFY13, total asset under management (AUM) stands at Rs 298 bn at the end of December 2012. While the mutual fund contributed to some of the growth, fees from the alternatives business faltered. Net interest margins (NIM) decreased marginally to 4.2% from 4.3% earlier. Other income saw an almost 89% fall YoY in 3QFY13 and an 80% fall YoY in 9mFY13, on account of the sale of a stake in IDFC Asset Management Company seen in the previous quarter last year. Bottom-line grew by 19% YoY in 3QFY13 and by 7.5% in YoY 9mFY13 on the back of higher net interest income but lower other income made profit growth seem relatively muted. The capital adequacy ratio stood at a robust 22.5% at the end of 9mFY13 (Tier-1 ratio of 20.2%). Continued thrust on government reforms and speedier implementation will help spur growth for IDFC going forward.