Markets shed gains, trading in red

Fri, 29 Apr 11:30 am

   Previous Close   

   Pre-Open   

   09:30 am   

   01:30 pm   

   Closing   

Indian stock market indices could not hold on to the early gains and have slipped into the negative territory. Capital goods and banking stocks are the biggest losers, while healthcare and FMCG stocks are trading firm.

The BSE-Sensex is down by 50 points while NSE-Niftyis trading 13 points below yesterday's closing. BSE Midcap and BSE Small cap indices are also down by 0.1% and 0.4% respectively. The rupee is trading at 44.41 to the US dollar.

FMCG stocks are trading strong led by buying interest in P&G Hygiene, Colgate and Hindustan Unilever. As per a leading financial daily, HUL has formed teams that will study customer behavior at the supermarkets. These customer care teams will also be responsible for understanding the demand for the products offered. It may be noted that the sales of the FMCG major exceed the annual domestic sales of its rivals Marico and Godrej in value terms. Modern retail stores contribute around 12% of the company's total sales.

HUL is in talks with retailers to work on a supply chain mechanism by which the company will be intimated as soon as the retailer receives an order. The company would thus start planning to service future demands. It is interesting to note here that the company has also been sending officials to global retailers like Wal-Mart, Tesco and Carrefour to learn about their systems. These initiatives are likely to increase sales and improve efficiency. Also, they would improve the terms between FMCG firms and modern retailers.

Energy stocks are trading mixed with Gujarat State Petronet and Petronet LNG trading firm, while Castrol and HPCL are trading weak. As per a leading financial daily, Reliance group is believed to be in advance stages of negotiation for buying out Bharti in the life insurance firm Bharti Axa Life. It may be noted that Bharti Axa is a joint venture between Bharti and Axa group in which Bharti holds 74% stake while Axa holds the remaining 26% stake. The company which started operations in 2006 continues to struggle in the Indian insurance industry. It currently holds a market share of 1.1%. In 2010-11, Bharti Axa's business premium income dropped 17% to Rs 3.6 bn. Reliance on the other hand is looking at financial services to deploy its investible surplus. Recently the company announced its financial services joint venture with the hedge fund DE Shaw. Life insurance provides a huge opportunity as it is a combination of insurance and savings. In the financial space, it is believed that Reliance will build businesses like non-banking financial services, insurance and asset management since entry barriers in these businesses are low as compared to banking.