Consumer durables boost markets

Tue, 8 Mar 11:30 am

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Indian stock market indices continue to trade positive on buying interest in heavy weights over the last two hours of trade. Stocks from consumer goods and IT space are trading firm while stocks from the healthcare and FMCG space are trading weak.

The BSE-Sensex is up by 163 points while NSE-Nifty is trading 47 points above the dotted line. BSE Midcap and BSE Small cap indices are trading 0.9% above Monday's closing. The rupee is trading at 45.02 to the US dollar.

Automobile stocks are trading in the green led by Bajaj Auto and Ashok Leyland. As per a leading financial daily, the country's largest automobile company Maruti Suzuki's sports sedan Kizashi has received 400 bookings in the first month of its launch. On the back of such a favourable response, the auto company has placed another shipment order of 350 cars from its parent Suzuki Motor Corporation, Japan. Kizashi is manufactured in Sagara, Japan from where it is imported by Maruti into India. The deliveries are likely to start by March 10. The sedan which was launched on February 2 is priced at Rs 1.65 m for manual transmission and Rs 1.75 m for automatic transmission. It will face competition from other sedans such as Honda's Civic and Accord and Toyota's Corolla and Camry from the A4 and A5 segments of cars. The A4 and A5 segments have grown by about 23% this year and constitute 3.5% share of total passenger car market.

Maruti is optimistic about rising incomes of Indians and has ambitious plans for the premium segment in passenger cars. It may be noted that the company had recently announced a promotional campaign for "Kizashi" to be aired during the ongoing cricket World Cup. It is expected to spend up to Rs 80 m on the entire campaign including the TV commercials.

FMCG stocks are trading firm led by Colgate and Marico. As per a leading financial daily, Godrej Consumer Products Limited (GCPL) is looking at acquisitions to augment its soaps portfolio. The company which has a 10% market share in the soaps category feels that to expand its market share it needs to acquire existing brands since this would be easier than trying to build brands from scratch. As per a company's spokesperson, for every acquisition, the company evaluates the synergies and how the acquisition can benefit the company in terms of geographical reach and benefits. GCPL is also evaluating bring Tura, its recently acquired soaps brand in Africa to India. It may be noted that GCPL had a strong two years of growth due to consumers down trading. But now that the economy has picked up again, consumers are up trading to premier quality soaps. While this will not have a significant effect on the company in the short term, in the long term, it will hurt GCPL if it does not field products across various price points.