Markets recover early losses

Fri, 14 Jan 11:30 am

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After starting today's session on a negative note in the morning Indian indices have recovered some of the early losses but continue to trade in the red. However, other key Asian markets are trading mixed. Currently, heavyweights in the Sensex are trading mixed with stocks from metals and auto space witnessing selling pressure. However, consumer durables and IT stocks are trading firm.

Currently, the BSE-Sensex is trading down by around 17 points, while the NSE-Nifty is down by about 9 points. Buying interest amongst the mid cap stocks is muted with BSE Midcap index trading lower by 0.15%. However, BSE Small cap index is trading with marginal gain and is up by 0.07%.

FMCG stocks are trading mixed with HUL and Paper Products leading the gains. However, Camlin and Archies are trading weak. Britannia Industries Ltd, a leading player in biscuit manufacturing, has entered into the breakfast food segment. The company plans to launch a range of ready to cook breakfast mixes in upmas, porridges and oats, amongst others. This move has put Britannia in the league of ITC Foods, Nestle and MTR Foods, which have a significant national presence in the breakfast food segment. Right now, the company has launched these products only in Mumbai and has plans to for a nationwide launch in gradual phases. Although this is likely to provide an upside to the revenue it would be difficult to penetrate the market due to the presence of established players in this niche segment. Nonetheless, considering that the organised market is only 20-30% of the food processing industry in India the company has reasonable headroom to capture incremental market share if it plays its ball right.

Hotel stocks are trading weak led by Country Club and Hotel Leelaventure. As per a leading financial daily, Indian Hotels plans to execute a pipeline of 43 projects over the next 36-48 months. This would increase the inventory of the hotel chain by 10,000 - 12,000 rooms. The rooms will be spread across the company's brands (i.e. Ginger, Gateway, Vivanta and Taj).  However, the company's focus will be on the budget category. Indian Hotels believe that Ginger is a value proposition and there is a supply gap for this category. To bridge this gap, the company aims to increase the number of Ginger properties to 150-200 in the next 10 years from the current 30 properties. To fund its growth, the company is looking at various options to raise funds. However, it has not commented on anything specific. However, the company is planning to increase its tariffs from September 2011. It may be noted that the tariffs at present have reached the pre-2008 levels. Indian Hotels is also planning to hive off its international properties in a separate company in a few years which may also get listed.