Hint of peak rates cheer Indian mkts

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A hint of interest rates peaking off cheered investors in Indian stock market in the latter half of the session today. While the markets briefly reacted negatively to the 13th rate hike by the RBI in its Monetary Policy review today, hopes of interest rates easing in future brought back some momentum. Further, the de-regulation of savings account rates were also considered a positive. While the BSE-Sensex closed higher by around 316 points (up 1.9%), the NSE-Nifty closed higher by around 93 points (up 1.8%). The BSE Mid Cap and the BSE Small Cap indices, however, ended flat. Barring banking and consumer durable stocks, gains were seen across sectors today.

As regards global markets, Asian indices closed mixed today while European indices have opened on a positive note. The rupee was trading at Rs 49.55 to the dollar at the time of writing.

National Thermal Power Corporation (NTPC), India's largest power generation company, declared results for the reported results for the second quarter of FY12. The company reported 15% Yoy growth in net profit for the period while net sales grew by 18.4% YoY. As per a business daily, the power generator may fall around 18 bn units short of its potential production capacity in the current fiscal. This is beacuse state electricity boards (SEBs) have shunned purchases of expensive electricity produced with imported coal.

The company is bracing for the production shortfall, equivalent to nearly half of Delhi's annual power consumption, at a time when India is battling a power deficit. The expected shortfall in power generation by the state-owned utility is up 38% YoY. With the supply of domestic coal at a low, NTPC has to use imported coal that is increasing the cost of power. SEBs' aversion to buying expensive power has already resulted in NTPC reducing its power generation in the current fiscal to the tune of 7 bn units, which is now expected to more than double. NTPC needs 166 m tonnes (mt) of coal in the current fiscal of which around 16 mt has to be imported. The company has already placed orders for importing 12 mt.

Idea Cellular reported a 26.1% YoY growth in its revenues during 2QFY12. The growth was led by the growth in total subscriber base as well as the 25.2% YoY increase in the minutes of usage (on an aggregate basis). This offset the 7.2% YoY decline in ARPU during the same period. Coming to the key parameters relating to the company's mobile service business, the average revenue per user (ARPU) stood at about Rs 155 per month. The same figure stood at Rs 167 during 2QFY11 and at Rs 160 during 1QFY12. During 2QFY12, the average revenue per minute (ARPM) stood at 42.7 paisa, which was slightly higher than the 41 paisa seen during the previous quarter (1QFY12).

Idea's operating margins stood at 21.7% during 2QFY12, as compared to 19.6% in 2QFY11. This 2.13% YoY improvement in margins was mainly due to lower network operating expenses (as percentage of sales). This offset the increase license charges and access charges as well as the increase in the selling & marketing costs (as percentage of sales). The management expects 3G to be a major growth driver as it would lead to an increase in data related revenues as well as decongestion of the 2G networks.