India opens strong despite weak Asia

Tue, 9 Nov 09:30 am

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Asian markets have opened today on a weak note, with losses seen across China, Hong Kong, and Japan. As for the Indian markets, these have opened in the positive. FMCG and metal stocks are leading the gains currently.

The BSE-Sensex is trading higher by around 70 points (0.3%), while the NSE-Nifty is up about 20 points (0.3%). Mid and small cap stocks are also trading in the positive with the BSE-Midcap and BSE-Smallcap indices stronger by 0.5% and 0.7% respectively. The rupee is trading at 44.35 to the US dollar.

PSU banking stocks have opened today on a mixed note. While gains are seen in Corporation Bank and Indian Bank, others like SBI and Bank of Baroda are bearing the brunt of selling. SBI, India's largest banking company, announced its 2QFY11 results yesterday. The bank has reported 11% YoY growth in its interest income during the quarter on the back of 20% YoY growth in advances. As for the first half 1HFY11, interest income has grown by 9% YoY. Further, SBI's net interest margin has improved from 2.4% in 1HFY10 to 3.3% in 1HFY11 led by robust growth in low cost deposit base (CASA). Its cost to income ratio has also reduced from 52% in 1HFY10 to 46% in 1HFY11 due to write back of employee cost provisioning. As for the net profits, these have grown very marginally during the quarter, largely owing to a significant jump in the bank's provisioning for bad loans. SBI's gross NPAs (including those of State Bank of Indore) increased to 3.4% of advances in 1HFY11, from 3% in 1HFY10. Overall, the bank's performance has been mixed during the quarter and the half year period. What's concerning is the rise in NPAs that has the potential to eat further into its profits going forward.

After planning to spend a mammoth Rs 550 bn during the eleventh five year plan (2007-12) to expand its network, India's largest power transmission company Power Grid (PGCIL) is now talking about an even bigger spending for the twelfth plan (2012-17). The amount making the rounds is a huge Rs 1,200 bn. This spending will go towards expanding the company's power transmission line network to cover the entire country. PGCIL, which currently carries over 50% of power generated across the country, is launching its follow-on public offer (FPO) that starts today. The FPO will raise around Rs 76 bn from the markets, 50% of which will flow to the company while the remaining 50% will go to the Indian government as part of its 10% stake sale. The stock of PGCIL is trading marginally in the positive currently. Among other power stocks, GVK Power and NTPC are trading strong.