Good quarterly results helped bank stocks surge
R Chandrasekaran
Indian financial stocks performed creditably in April in the U.S. stock exchanges, as investors were hoping for a good quarterly result, which were announced during the week. However, the sector underperformed for the year-to-date as well as first quarter of 2013 than the major index.
HDFC Bank and ICICI Bank have announced their quarterly numbers during the week. While HDFC Bank profit surged 30.1 percent for the fourth quarter, ICICI Bank profit increased 21 percent.
Similarly, net revenue of HDFC Bank advanced 17.5 percent to Rs.61 billion, whereas ICICI Bank’s net interest income rose 12.69 percent during the March quarter.
Looking at the performance of the stocks in the U.S. bourses in 2013, both ICICI Bank and HDFC Bank suffered a loss of 1.63 percent and 8.10 percent, respectively, in the first quarter. This comes on the back of ICICI Bank recording a gain of 5.02 percent and 2.34 percent in January and March in the New York Stock Exchange, which was more than offset by 8.47 percent loss in February alone. However, the stock could advance 5.8 percent in April thus recording a gain of 4.08 percent for the year-to-date.
On the other hand, HDFC Bank was firmly under the bears grip in January to March losing 1.23 percent, 5.40 percent 1.66 percent, respectively, during the period. In total, the stock had lost 8.1 percent during the first quarter of 2013 in the U.S. stock exchange. However, the stock surged 12.61 percent in April alone thus wiping out all the losses suffered in the first quarter. The gain in April also allowed the stock to close the year-to-date with a gain of 3.49 percent.
During the month of April, S&P 500 could advance only 0.83 percent. Yet, for the first quarter and year-to-date, the index outperformed the India-based financial stocks listed in the U.S. stock exchanges. The major index gained 10.03 percent in the March quarter and further consolidated to post 10.94 percent gain until April 26 closing.
The IT stocks from India-based companies such as Wipro and Infosys too underperformed compared to the S&P 500 as their tepid outlook failed to find takers among investors.
The financial stocks would have been in the negative territory for the year-to-date, but for the quarterly results and the return of confidence in the stocks in April helped the sector to post gains.
To contact the author, e-mail: rchandrasekaran@americanbazaaronline.com