Volatility mars Indian indices

Wed, 1 Aug Closing

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Indian equity markets had a rather volatile trading session today. The indices began the day's proceedings on a firm note although subsequent trading hours saw the indices oscillate to either side of yesterday's close. The final trading hour, however, saw the bulls gain the upper hand as the indices closed above the dotted line. While the Sensex today closed higher by around 21 points, the NSE-Nifty today closed higher by 12 points. The BSE Mid Cap and the BSE Small Cap did well to notch gains of 1% each. Gains were largely seen in healthcare and FMCG stocks, while metals stocks were at the receiving end.

As regards global markets, Asian indices closed mixed today while European indices have also opened on a mixed note. The rupee was trading at Rs 55.55 to the dollar at the time of writing.

Most of the PSU banking stocks closed firm today with the key gainers being Union Bank, State Bank of India (SBI) and Bank of Baroda. Corporation Bank, however, bucked the trend and closed in the red. Corporation Bank declared results for the first quarter ended June 2012. The bank's net interest income (NII) grew by 14% YoY in 1QFY13, on the back of a 25% YoY growth in advances. Capital adequacy ratio stood at 12.92% at the end of 1QFY13 as per Basel II norms. Net interest margin (NIM) saw an increase to 2.3% from 2.1% in 1QFY12. Net NPA (non-performing assets) to advances came in higher at 1.2% in 1QFY13 from 0.5% in 1QFY12. Other income increased by 23% YoY in 1QFY13. Net profits increased by a muted 5% during the quarter on account of lower NII growth, higher provisioning and tax outlays.

Taj GVK also announced results for the first quarter ended June 2012. The company's net sales for 1QFY13 increased by 5.9% YoY. The topline remained under pressure due to the oversupply scenario and muted demand in the Hyderabad region. ARRs (average room rate) in Hyderabad declined while occupancy improved in Hyderabad leading to flat RevPAR. Chandigarh witnessed a decline in both ARR and occupancy compared to last year. Operating profit declined by 18.4% YoY on account of increase in expenditure. This was due to rise in fixed costs from newly opened hotels. Operating margins also declined by 8% YoY. This is because the company recorded high expenditure that eroded a substantial part of its revenues. Its fuel, power and electricity cost jumped 33% YoY. At the bottomline level net profits declined by 68.6% YoY while net profit margin declined by 14.4% YoY. High interest (up 69.4% YoY) and depreciation (up 20.2% YoY) costs for the new property (Vivanta by Taj - Begumpet which opened last year) impacted the company's profitability. The stock closed higher by 1% today.