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Energy & FMCG out of favour
Fri, 25 Apr 01:30 pm

After opening weak, Indian markets slipped further in to the negative territory led by heavy selling activity across index heavyweights. Losses are led by energy stocks and FMCG stocks, while realty sector stocks are trading firm.

The BSE-Sensex is trading lower by 132 points and the NSE-Nifty is trading lower by 42 points. The BSE Mid Cap index is trading down by 0.25% and the BSE Small Cap index is trading up 0.4%. The rupee is trading at 61.1 to the US dollar.

Majority of the auto stocks are trading in the red with Escorts and Eicher Motors being the biggest losers whereas Mahindra & Mahindra and Tata Motors are among the few trading in the green. As per a leading financial daily in the light of depressed market conditions, leading car manufacturers have deferred price hikes in passenger cars to avoid being hit by a backlash. Car companies like Maruti Suzuki, Hyundai, Tata Motors, Toyota Kirloskar, Ford Motors, General Motors & Mercedes Benz have kept old prices in-tact amidst weak demand and falling sales. Car sales declined by 7% in March to 2.4 lakh units while for the full year 2013-14, overall car sales were down by 5% to 17.9 lakh units. Car companies normally hike prices in the months of January and April. Most companies had raised prices in January and a few in February. But with no significant recovery in sight despite excise tax concessions of 4%-6% offered by the government in February, car companies largely stayed away from hiking prices although faced with margin pressures. Only a few companies such as Honda Car India, Mahindra & Mahindra have raised prices whereas German car company Audi will increase price from May.

Barring Orient Paper, all paper stocks are trading weak today with Ballarpur Industries (BILT) and Tamil Nadu Newsprint being the major losers. As per a leading business daily, BILT plans to raise funds to the tune of about US$ 250 m through an IPO of its international business on the Singapore exchange. The main purpose for the issue is to cut down its mounting debt. Reportedly, the company is working with Deutsche Bank AG for the issue and the share sale is expected during second half of 2014. Earlier in 2011 the company deferred out its plan to raise US$ 330 m for its London IPO of BILT Paper Plc as it was seeking higher valuations. Currently, the company's debt is about Rs 52 bn as compared to Rs 33.7 bn in June 2013. Its debt to equity ratio is more than 1 times.

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