FMCG, pharma don't join the party

Mon, 2 Jun Closing

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Persistent buying activity led the Indian markets to gain momentum as the day progressed. The BSE-Sensex closed the day with gains of nearly 470 points or 1.9%, while the NSE-Nifty closed higher by about 133 points or 1.8%. Barring stocks from the FMCG and healthcare sectors, gains were seen across the board with stocks from the capital goods and banking spaces being the top gainers. The BSE Mid Cap and BSE Small Cap indices ended the day on a firm note as well, with the indices closing higher by about 2.2% and 2% respectively.

Stock markets in other parts of Asia ended the day on a firm note with Japan and Hong Kong markets ending higher by 2.1% and 0.3% respectively. The rupee was trading at Rs 59.14 to the dollar at the time of writing.

FMCG stocks ended the day on a weak note with Nestle, Dabur and ITC being the least preferred today. Biscuit maker Britannia Industries' results were given a boost by a 2.3% expansion in operating margins for the full year ended March 2014. This was led by various cost cutting efforts including lower input costs coupled with lower ad-spends. To keep the momentum going, the company is now looking to shelve its image of being a laggard in innovation and is looking to launch new brands in India in the future. These efforts will also be towards improving market share and accelerating growth. As per an article in the Mint, the company's management is looking at introducing new products with new packaging across its portfolio. It is believed that the company did well in the healthy biscuits segment, but has lost out on market share in the cream biscuits segment. The stock of Britannia Industries ended the day higher by about 2%.

Stocks of automobile manufacturers ended the day on a firm note led by Maruti Suzuki, Eicher Motor and Ashok Leyland. Bajaj Auto announced sales volumes for the month of May 2014 recently. The company reported a 3% YoY increase in motorcycle volumes as compared to the corresponding month last year. As for commercial vehicle sales, the same increased by 11% YoY, while total sales volumes were higher by 4% YoY. Sales growth during the month was led by a strong jump of 40% YoY in export volumes with the same forming nearly half of the company's total volumes. In comparison, Hero Motocorp saw an 8% YoY jump in volumes during the month. Sales volumes for the company crossed the 600,000 mark for the second time, with actual volumes at 602,841 units. TVS Motor, on the other hand, reported a 27% YoY jump in volumes during the month. Led by a strong growth in the scooter (up 60% YoY) as well as motorcycle (up 24% YoY) segments.