FMCG, banking stocks not in favour

Wed, 22 Jan 09:30 am

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Indian stock markets started the day on a weak note. The BSE-Sensex is trading lower by about 40 points or 0.2%, while the NSE-Nifty is trading down by about 14 points or 0.2%. Stocks from the mid and smallcap spaces are however in demand during the opening session, with the BSE Mid Cap and BSE Small Cap indices up by about 0.1% each. Stocks from the banking, realty, information technology and FMCG spaces are not in favour at the moment.

Stock markets in other parts of Asia are largely trading firm with China and Hong Kong up by about 1.7% and 0.1% respectively, while Japan is down by about 0.4%. The rupee was trading at Rs 61.54 to the dollar at the time of writing.

Auto stocks are currently trading mixed with Maruti Suzuki and Mahindra and Mahindra trading firm, while Ashok Leyland and Hero Motocorp are trading weak. Commercial vehicle manufacturer Ashok Leyland announced its results for the quarter and nine month period ended December 2013 yesterday. The company reported a top line decline of 19% YoY during the quarter. But as expenses fell at a slower pace, the company reported a loss at the operating level to the tune of Rs 969 m. Further, higher finance charges and lower exceptional income (on a YoY basis) led the company's losses before tax to expand. The company reported a loss before tax of Rs 1.9 bn, while net losses came in at Rs 1.6 bn. During the 9mFY14 period, Ashok Leyland's revenues declined by 22% YoY, while operating losses came in at Rs 174 m as compared to operating profit of Rs 6.9 bn during the corresponding period of last year.

Stocks of chemicals companies are trading firm led by Bayer Cropscience and BASF India. As per a leading business daily Tata Chemicals is looking to invest Rs 17 bn over the next two years. The company is looking to add five to ten products in the customer portfolio. This segment includes products such as Swach water purifiers, Flavoritz flavoured salt and i-Shakti lentils. It is also looking to expand its US based soda ash project. Rs 6 bn will be allocated for the same, which would help expand the soda ash manufacturing capacity by about 25%. As reported by the leading business daily, these moves are part of the company's focus to be a specialty chemicals and consumer products manufacturer. Tata Chemicals' financial performance has been quite volatile in recent times. During 1HFY14, the company's consolidated revenues grew by 6% YoY, while profits declined by 43% YoY. As per the management, it is aiming to cut the debt on books by half. As of September 2013, the standalone debt on books stood at Rs 14.5 bn. The stock of Tata Chemicals is currently trading marginally higher.