Indian markets open weak

Tue, 5 Apr 09:30 am

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Asian markets are currently trading in the mixed. Benchmark indices in Hong Kong (up 1.5%), China (up 1.3%) and Singapore (up 0.4%) are the leading gainers. However, markets in Japan (down 1.2%) and Indonesia (down 0.3%) are trading weak. The Indian stock markets have opened the day on a weak note. IT and auto stocks are the major losers. However, stocks in the energy and power sectors are witnessing buying interest.

The BSE-Sensex is trading lower by around 28 points (0.1%), while the NSE-Nifty is down by around 4 points (0.1%). Midcap and small cap stocks are however trading in the positive, with the BSE Midcap and BSE Small cap indices up by about 0.2% and 0.4% respectively. The rupee is trading at 44.43 to the US dollar.

FMCG stocks have opened the day on a good note with Godrej Consumers, Tata Global Beverage and Nestle leading the gains. FMCG company, Marico Ltd has announced that it plans to concentrate only on its core brands. These would include Parachute hair oil, Nihar, Hair & Care and Saffola edible oil. In line with this strategy, the company has already begun to divest stake in the non-core brands. The company has already raised Rs 26.61 bn by divesting the brands that are not considered to be core. These include the Sweekar sunflower oil and the Sil jams that the company had sold in 2008. The focus on core brands is expected to aid profitability for the company. The company is looking at expanding the Saffola brand to include other value-added foods. It also plans to de-risk its dependence on Parachute hair oil. Parachute's contribution to total revenues has come down to 40% as against 60-70% historically. Marico has a strong brand portfolio that is present in niche segments. The company also enjoys pricing power in these segments.

Energy stocks have opened the day on a positive note. ONGC, IOC, GAIL and Cairn India are all trading in the green. However, HPCL is witnessing selling pressure. State-owned gas distribution utility GAIL plans to foray into the power sector. It will do so through a tie-up with NTPC, the country's largest power generation firm. They plan to set up a joint venture for building gas-based power plants in India as well as in other countries. The two firms are currently deliberating on the same and will probably sign a MoU (Memorandum of Understanding) soon. The MoU shall remain valid for a period of three years from the date of signing and can be extended further through mutual consent of both the companies.

GAIL and NTPC are already partners in Ratnagiri Gas and Power Pvt Ltd (RGPPL). This firm runs the 1,967 MW Dabhol power plant in Maharasthra. The two PSUs hold 30.17% equity stake each in RGPPL. The remaining equity is with Maharasthra State Electricity Board (MSEB) and financial institutions.