Indian stock markets marred by volatilty

Wed, 9 May 01:30 pm

   Previous Close   

   Pre-Open   

   09:30 am   

   11:30 am   

   Closing   

After a negative opening, Indian stock markets recovered for a brief period and slipped in the red again in the last two trading hours. Majority of the sectoral indices are trading negative with realty, banking and metal stocks being the biggest losers. Only FMCG and IT stocks are trading positive.

The BSE-Sensex is trading down 43 points and NSE-Nifty is trading down 19 points. Both BSE Mid cap index and BSE Small cap indices are trading down by 0.5% and 0.6% respectively. The rupee is trading at 53.5 to the US dollar.

Majority of the FMCG stocks are trading positive with Emami and Dabur being the biggest gainers. As per a leading financial daily, sales value of select FMCG categories is growing much faster than volumes in modern trade channel, states Nielsen's report. These categories include items of daily usage such as hair oils, toilet soaps and toothpastes as well as impulse-driven categories such as biscuits, chocolate and noodles. In categories such as edible oil and instant coffee, value growth has been 2-3 times higher than volume growth. This shows that modern retail shoppers with higher purchasing power have not been majorly impacted by the inflationary environment and they continue to upgrade to premium products and make impulse purchase and deal-based large pack buys. Realising the growing importance of modern trade, value added categories are being first launched in organized retail by FMCG companies.

Most of the steel stocks are trading weak led by Jindal Saw, Steel Authority of India (SAIL), Jindal Steel and JSW Steel. A leading business daily has reported that demand from sectors such as construction and infrastructure has led to higher demand for steel, thereby increasing the steel imports in the month of April 2012. Reportedly, steel imports increased by 65% to 545,000 tonnes. The same figure during the corresponding period last year stood at about 332,000 tonnes. Steel consumption gained momentum and grew by 7.7% to 5.6 MT in April 2012 as against 5.2 MT in corresponding month last year.

As for steel production, the same grew by 5.3% during the month to 5.99 MT as against 5.7 MT in April 2011. It may be noted that the World Steel Association (WSA) expects the steel demand in India to clock growth at levels of about 7% in 2012. WSA's view is in line with those of major Indian steel producers such as SAIL and Tata Steel, who expect steel consumption to increase by 8% to 9% in FY13. The rationale behind the same is higher demand from the infrastructure and construction sectors.