India up, despite weak Asia

The markets continued their upward trend as buying activity intensified during the final hour of trade. The BSE-Sensex closed with gains of around 190 points, while the NSE-Nifty closed higher by about 60 points. The BSE mid-cap and small-cap indices ended the day in the green as well. While buying activity was witnessed in stocks from the consumer durables, banking and capital goods sectors, stocks from the software and FMCG bore the brunt of profit booking.
As regards other Asian markets, they ended a mixed bag. The European indices are currently trading in the green. Rupee was trading at 49.83 against the US dollar at 3.30 pm IST.
FMCG stocks ended mixed. While P&G, Dabur and Colgate garnered investors interest, HUL and GSK Consumers were at the receiving end. GSK Consumers announced its results today. The company’s topline grew by 31% YoY during 1QFY09. Its operating margins improved by 2.3% during the quarter mainly because all the major cost heads other than input costs grew at rates lower than the topline. The bottomline grew by 48% YoY aided by robust operating margins growth coupled with lower interest and depreciation cost.
Rating agency Crisil has a warning for the Indian banking sector. It expects some deterioration in the balance sheets of Indian banks’ on account of a rise in the non-performing assets (NPAs) going forward. The agency believes that gross NPAs will rise to 5% of total advances by March 2011, which would roughly amount to Rs 1.9 trillion. This would mean a nearly threefold rise in the delinquencies for the sector. It expects that this rise in delinquencies will largely be reported among corporate loans which constitute about 56% of banks total advances and 60% of total loans delinquencies. On the retail loans side, Crisil expects the NPAs to rise to 4% by March 2011 as compared to 3.2% in March 2008. However, the rating agency believes that due to the strong capitalisation of the Indian banks, they would be in a comfortable position to handle this rise in NPAs. Banking stocks ended the day on a positive note.
As per a leading business daily, foreign direct investment (FDI) into India is expected to be at least US$ 40 bn in FY10 on the back of a positive outlook for India. It may be noted that the FDI during for FY09 was likely around US$ 37.5 bn including the reinvestment by foreign firms. As per joint secretary Mr. Gopal Krishna, even though some investment in FY10 would be delayed, the overall outlook is positive.