Advance tax payments by Indias top 100 corporate taxpayers grew 13% in September, an indication that the profit growth in second quarter could be muted. But the stock markets may already be looking ahead to bumper third quarter. The top hundred companies paid `23,780 crore in advance tax in September against 21,059 crore last year, a finance ministry official said.

The drop in advance tax collections from 21% in the first quarter is in sync with the expectations of a lower economic growth in the second quarter.

The second quarter (GDP) figures will be below even 8.5%, while the third quarter will witness more than 8.8% economic expansion, witnessed in the first quarter, said Kaushik Basu, chief economic advisor to the finance ministry.

Advance tax is paid in four installments in June, September, December and March and is based on taxpayers projected earnings and thus gives an indication of industrys performance in coming months. The banking sector paid 22% more in advance taxes in the second quarter, justifying the top billing in the ongoing stock market rally, but the biggest of them the State Bank of India only paid 5% higher taxes.

Cement was a surprise laggard, belying the recent run up in their stock prices. The sector tax collections were down over 50%. Oil & gas was another heavyweight sector that pulled down the overall collections. In the current month, the National Stock Exchanges Nifty index has run up 9% but banking index has done better at 12.6% while the recent protectionist noises in the US have dragged down the IT sector, which grew by only 8.4%.

Its a mixed bag. Some sectors such as cement and FMCG are weak and some such as banking are strong, said Jagannadham Thunuguntla, Equity Head, SMC Capitals. On a cumulative basis, up to September, the growth in advance tax is over 16%. Though, the collections have been subdued in the second quarter, the finance ministry expects the December quarter to make up for it.

HDFC Banks chief economist Abheek Barua does not see the numbers as a concern and feels that the tax numbers for some sector seem to be at odd with the sales figures. Automobiles could be one such sectors, as despite strong sales growth month after month, the advance tax payments are up only 16%.