Realty & IT pumps up the indices

Mon, 7 Feb 09:30 am

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Asian markets have opened the day on a mixed note. Markets in Korea (up 1.3%), Japan (up 0.7%) and Malaysia (up 0.2%) are trading in the positive zone. However, markets in Hong Kong (down 0.4%) and Indonesia (down 0.5%) have opened in the negative. Markets in China remained closed today. Indian markets have opened the day on a positive note. Stocks in the realty and IT space are the leading gainers.

The BSE-Sensex is trading higher by around 109 points (0.6%), while the NSE-Nifty is up by around 28 points (0.5%). Mid and small cap stocks are trading in the positive as well, with the BSE Midcap and BSE Small cap indices up by about 0.6% and 0.4% respectively. The rupee is trading at 45.58 to the US dollar.

Banking stocks have opened the day on an upbeat note. Bank of India and PNB are leading the gainers' pack. Bank of Baroda has declared its third quarter results recently. The bank recorded a 48% YoY increase in its net interest income for the 9 month period ended December 2010. This was on account of the 33% YoY growth in advances. The advances in the overseas markets grew by 27% YoY during the period. Domestic advances also outperformed the sector average. Its other income remained flat for the 9mFY11 period due to the fall in the treasury income. The net interest margin improved to 3.2% in 9mFY11 from the 2.9% levels in 9mFY10 on the back of re-pricing of the domestic assets. This was despite the subdued yields on the overseas assets during the period. The net profit grew by 37% YoY during the period. The bank's cost to income ratio declined during the period to 38% as compared to the 46% during the same period last year. The net NPAs for the bank stood at 0.4% while the capital adequacy ratio stood at 12.5% as at the end of December 2010. The bank has huge hiring plans to fuel its growth in coming times. It plans to hire 4,000 employees in FY12. It has already hired 1,660 employees in FY11.

Pharma stocks have opened the day in the negative zone. Cipla, Sun Pharma and IPCA Labs are the biggest losers. However, Glenmark Pharma and Ranbaxy are witnessing buyers' interest. Pharma major, Cipla has announced its 3QFY11 results. The revenues grew by 8% YoY. The domestic business grew by 11% YoY while the export segment recorded a growth of 12% YoY during the quarter. The exports formulations grew by 12% YoY and the exports API business grew by 13% YoY during the quarter. The company's operating margins witnessed a decline of 6% YoY during the quarter and fell to 20.5% from 26.4% during the same period last year. This was on account of higher staff costs as well as higher other expenditure as a percentage of sales. The sharp increase in staff costs during the quarter was on the back of annual increments as well as increase in headcount during the quarter. The net profits declined by 20% YoY during the quarter. This was on account of lower operating margins as well as higher depreciation charges. These offset the positive impact of higher other income as well as the fall in interest costs as well as lower tax expenses. The profits were negatively impacted by the gestation period of the Indore SEZ, which was set up with a huge investment of Rs 80 bn.