Capital goods stocks rally markets

Mon, 14 Feb 11:30 am

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Indian indices, after opening in the positive, have continued their northward journey led by buying interest in heavy weights over the previous two hours of trade. Stocks from the consumer durable and auto space are trading firm, while stocks from the oil & gas space are trading weak.

The BSE-Sensex is up by 316 points while NSE-Nifty is trading 97 points above the dotted line. BSE Midcap index is up by 2.5% while BSE Small cap index is trading 3.3% above Friday’s closing. The rupee is trading at 45.53 to the US dollar.

FMCG stocks are trading firm led by Marico and Camlin. As per a leading financial daily, Emami Group is close to buying Sweekar, a refined sunflower oil brand of Marico. It may be noted that Sweekar is an Rs 800 m brand and has been on the block for some time. Emami is on an expansion mode and its board has approved acquisitions up to Rs 50 bn in India and abroad. The company is also looking to invest about Rs 10 bn in the edible oil sector. While Marico has not confirmed this news, Emami’s spokesperson has stated that the firm is looking at some acquisitions. However, nothing has been finalized yet.

Emami Biotech has a modern oil processing unit at Haldia in West Bengal. The company had entered the packaged edible oil market last with a brand named Healthy and Tasty. This brand has five variants which include soyabean, sunflower, palm oil, mustard and soyabean blends. Emami also plans to set up new facilities at Krishnapatnam in Andhra Pradesh and one in Gujarat besides expanding capacity at its current plants.

Auto stocks are trading firm with Force Motors and Tata Motors leading the gains. Tata Motors is conducting a feasibility study in Indonesia to set up a plant to manufacture Nano. If the plan fructifies it will not only give the company an access to a large untapped market in Indonesia but will also enable it to address the adjoining markets of Thailand, Malaysia and Philippines. Earlier the company was planning to expand its facility in Thailand but considering that Indonesia has been reviving at a faster pace and the automobile market there is expected to grow at a healthy rate, Tata Motors narrowed in on Indonesia. Further, the fact that Indonesia has a large rural population will help the company boost its Nano sales which have been lingering of late as far as the domestic market is concerned. The planned facility in Indonesia is likely to commence operations by FY13 with a target to churn out 50,000 Nano’s and some of the variants of Ace range, every year.