Indian stockmarkets closed today with the best gains amongst its Asian peers. Gains here were led by the metal and auto packs, while telecom was the lone loser among the key sectors. The overall advance to decline ratio stood at 1.6 to 1 on the BSE.

Improved export numbers coming out of China led to renewed optimism across Asian markets that the economic recovery still has a lot of steam left. Among the key Asian markets today, stocks in China and Singapore gained around 1% apiece. India however was the best performer amongst all, as the BSE-Sensex and the NSE-Nifty closed with gains of around 200 points (1.2%) and 60 points (1.3%) respectively.

Stocks from the midcap and small cap spaces also made hay while the sun shone. The BSE-Midcap and BSE-Smallcap indices gained by 1.9% and 1.5% respectively. The rupee was trading at 46.14 to the US dollar at the time of writing.

HDFC Bank announced its second quarter and first half FY10 results today. Clearly signaling a slowdown in the growth of asset book for the Indian banking sector as a whole, the bank reported a tepid 15% growth in advances during 1HFY10. The same was nevertheless accompanied by a firm uptrend in net interest margins that touched 4.2% at the end of September 2009. Cost efficiency that was one of the bank's main concerns after the acquisition of Centurion Bank of Punjab seems to have been worked upon as the bank has managed to reduce the cost to income ratio from 55% 1HFY09 to 50% in 1HFY10. HDFC Bank's asset quality also continued to remain healthy with net NPAs at 0.5% of advances as against 0.6% in 1QFY10.

Despite these decent results, the stock was amongst the few losers from the banking pack. Key gainers here included Yes Bank, Axis Bank, and ING Vysya Bank.

In yet another move of diversifying from its core business of engineering, L&T is looking to foray into the business of power generation. As per comments from the company's CFO, L&T may invest in 1,000 megawatt (MW) to 2,000 MW power plants over the next few years, and further expand to 5,000 MW in the five years after that. While we understand that the power sector presents itself as a huge opportunity over the next few years, what worries us is that companies with no real experience in setting up or managing power plants are jumping whole hog into the sector. Some are even raising money from investors through IPOs to fund their power plans that will not churn out any earnings for the next 4 to 5 years. We worry whether this ‘power' game is turning out to be the next bubble! We have no clue, but some signs are worrying.

Anyways, while L&T closed in the positive today, other key engineering stocks that found buying interest were Punj Lloyd, Crompton Greaves, and BHEL.

Telecom was one sector that lost out in today's trade. In fact, stocks from the sector have taken a major beating in the past few trading sessions. The reasons behind the same are various - the TRAI's plans to enforce per second billing tariffs, the not so inspiring GSM subscriber additions numbers for the month of September 2009. Ever since these incidents began to pop up, these stocks have taken a drastic fall. Over the past 15 trading session, the stock of Bharti Airtel, RCOM and Idea are trading lower by about 20% each.