FMCG, pharma stocks not in favour today

Mon, 23 Jun Closing

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The Indian equity markets opened the day on a firm note, but soon slipped below the dotted line. The benchmark indices continued to languish in the red thereafter. While some buying activity was witnessed during the final hour of trade, it was not enough to push the indices above last Friday's closing levels. The BSE-Sensex closed lower by 78 points and the NSE-Nifty closed down by 20 points. The small cap and mid cap stocks were however in favour today. The BSE Mid Cap and BSE Small Cap indices closed up by 0.63% and 0.56 % respectively. Stocks from FMCG and healthcare sectors were among the leading losers.

As regards global markets, Asian indices closed mixed today while European indices have opened weak. The rupee was trading at Rs 60.22 to the dollar at the time of writing.

All sugar stocks closed the day on a firm note. Shree Renuka Sugars and Bajaj Hindustan were the biggest gainers. In order to bail out the sugar industry, import duty has been raised to 40% from the prevailing rate of 15%. Higher duty will discourage imports and thus benefit domestic producers. Apart from raising import duty, mandatory blending of ethanol with petrol has also been raised to 10%. Both these measures are likely to benefit sugar companies. However, the food minister, sounded caution stating that the incentives have been doled out so that mills can clear the dues of the farmers that have been pending for long. It may be noted that farmer dues to the extent of Rs 110 bn have been pending as of now due to the ailing health of sugar companies. We thus believe that incentivizing the industry by the measures adopted is a step in the right direction.

Majority of the automobile stocks ended the day on a firm note with Ashok Leyland and Hero Motorcorp being the leading gainers. An article in leading financial daily highlighted the top 15 selling cars in India. As per this article, Tata Motors has shown a strong performance. Maruti Suzuki however did not have any of the models in this list. Reportedly, most of the car users look for the models which are fuel efficient. Even the companies too made huge investments to develop fuel efficient models. It is critical as it helps in better uptake of its models. Honda's diesel-powered City gives currently holds the top position in this list. Tata Motors however had ten models as part of the list. Some models of Toyota and Hyundai were also part of this list. In view of the current fuel prices in India, it is would be essential for auto manufacturers to offer more fuel efficient models. Thus, those companies who are fulfilling such needs of customers will be more successful in long term.