RBI seen raising repo rate again

The Reserve Bank of India (RBI) is expected to raise its key policy rate by a further 25 basis points next week after inflation quickened in June and may hike once more by the end of the year, before pausing its long tightening campaign, a new Reuters poll shows.

Expectations that the repo rate will peak at 8% by end-2011 are largely unchanged from a previous forecast in mid-June, and hinge largely on whether persistently strong price pressures in Asia's third-largest economy will soon begin to abate.

India's wholesale price inflation quickened in June to an annual 9.44% from 9.06 percent in May, driven by higher prices for manufactured goods and fuel, even as the economy showed signs of cooling.

Sensex slips

The benchmark indices slipped on profit booking in the afternoon trade. Pharma, power, capital goods, IT and auto stocks were trading in negative terrain while buying was seen in select FMCG stocks. Reliance, Infosys, ICICI Bank, Wipro and NTPC were negative contributors to the bourses.

At 12.51 hrs IST, the Sensex was down 85.80 points or 0.46% at 18568.07, and the Nifty was down 37.20 points or 0.66% at 5576.35.

About 1303 shares advanced, 1420 shares declined, and 943 shares remain unchanged.

Top losers on the Sensex were Wipro at Rs 395.50 down 4.7%, Hindalco at Rs 180.80 down 1.93%, Jaiprakash Asso at Rs 76.20 down 1.87%, M&M at Rs 705.50 down 1.46 and Hero Honda at Rs 1,770 down 1.41%

IT, ITES sectors witnessing highest attrition rate in India

The information technology (IT) and healthcare sectors are witnessing the highest attrition rates among talented employees, making retention of critical manpower resources a key challenge, says a survey.

According to a study conducted by MyHiringClub.com, the IT and ITES sectors saw the highest attrition rate of 23% in the first quarter of 2010-11.

In contrast, the banking and financial services sector witnessed an attrition rate of 18%, followed by healthcare (12%), FMCG (11%) and automobiles and manufacturing (11%).

"Attrition is a major problem with India Inc and it suddenly got increased in the first quarter of the current fiscal year. The major reason behind (this) was that firms had started paying more to newly hired employees.

"Beside pay packages, career level growth and relationships with supervisors are the other reasons for higher job attrition," MyHiringClub.com Founder and CEO Rajesh Kumar said.

The main reason for switching a job is pay packages (21%), followed by career level growth (16%), dissatisfaction with supervisors (15%) and work pressure (14%). 

Employees with experience of up to five years had the highest attrition rate of 39%, while it was 27% for those with 5-10 years of experience and 22% in the 10-15 years' experience bracket.

Interestingly, senior-level employees (experience more than 15 years) had a very low attrition rate of 15%.

Ashok Leyland Q1 net down 30%

Commercial Vehicle maker Ashok Leyland missed street estimates as first quarter net profit fell 30% from a year ago to Rs 86.25 crore amid high raw material costs and surge in financial expenses.

Net sales for the April-Jun quarter were also slow, up 6.3% year-on-year to Rs 2,495.51 crore.

Analysts on average had expected Ashok Leyland’s net profit at Rs 95.3 crore on revenue of Rs 2,435 crore according to a CNBC-TV18 poll.

Ashok Leyland had sold 19,277 vehicles in the April-June quarter, down about 10% from a year ago.

Most automobile companies have faced pressure from rising cost of raw materials like metals, plastic and rubber over last several quarters. During the first quarter, Ashok Leyland’s input costs rose 13.4% year-on-year to Rs 1,960.63 crore.

A 68.7% jump in financial expenses at Rs 53.35 crore also hurt the company's earnings during the quarter. 

The Hinduja group company’s operating margin in the first quarter was at 9.7%, compared with 10% in the year ago quarter.

Ashok Leyland shares fell following the disappointing results and at 14:15 hrs were traded down 2.9% at Rs 50.70 on NSE.

Vineet Hetamasaria, vice-president - research at brokerage Pinc told moneycontrol.com the results were better than his estimates, but the market in general had expected higher numbers, and so the sell off in the stock.

Hetamasaria feels the stock could decline another 5-7% over the next 2-3 months due to lack of any positive triggers, at least till the festive season.

HDFC Bank Q1 net profit up 34%

India’s second largest private sector lender HDFC bank ’s first quarter (April-June) net profit rose more than 33% to Rs 1,085 crore, compared to the same period last year. This was slightly ahead of a CNBC-TV18 poll that had estimated the bottomline at Rs 1,064.2 crore.

Net interest income in the April-June period jumped 18.6% year-on-year to Rs 2,848 crore from Rs 2,401 crore a year back. Net interest margin (NIM) sequentially remains unchanged at 4.20% suggesting that the bank has successfully passed on the higher cost of borrowings to its customers.

However, the share of CASA (Current Account Savings Account) ratio fell marginally to 49.1% from 51% in March quarter. During the quarter, loans grew by 20% year-on-year to Rs 1.75 lakh crore while deposits grew by 15.36% to Rs 2.11 lakh crore.

Amidst concerns of rising bad loans in the overall industry, the bank managed to maintain its asset quality. Its gross non-performing assets (NPAs) decreased quarter-on-quarter to 1.04% from 1.1% while net NPAs fell by two basis points to 0.18% from 0.2%.

Bank’s total capital adequacy ratio rose to 16.9% from 16.2%. in March, 2011. During the quarter, the lender also raised Rs 3,650 crore of tier II capital by issuing tier II