FMCG, IT stocks out of favour

Tue, 3 Jul 01:30 pm

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The Indian equity markets continued to trade in a range bound manner, albeit well above the dotted line, during the post noon trading session. Buying activity is being witnessed in stocks across the board, barring those from the IT and FMCG spaces as the respective indices are trading lower. Stocks from the consumer durables and realty spaces are amongst the top performers at the moment.

The Sensex today is trading higher by about 70 points (0.4%), while the NSE-Nifty is trading higher by about 20 points. The BSE Mid Cap and BSE Small Cap indices as they are trading higher by about 0.5% and 0.6% respectively. The rupee is trading at 54.88 to the US dollar.

Software stocks are trading mixed with Moser Baer (India), CMC Ltd and Mphasis Ltd being the biggest gainers. However, Tata Consultancy Services (TCS) and Mahindra Satyam are trading weak. As per a leading financial daily, reforms in the American healthcare sector are expected to boost the Indian Information Technology (IT) sector. Interestingly, the sector which has been feeling the pinch of the recent anti-outsourcing policies measures taken by the US President Mr. Barack Obama is going to be benefited by the Patient Protection and Affordable Care Act, brought by him only. As per this Act, around 30 m uninsured Americans would be forced to have healthcare insurance. And that will create big opportunities for the IT companies in terms of data creation, analytics as well as management. As per the estimates, this could fetch deals worth as high as US$ 22 bn. This is definitely a good sign for the Indian IT sector which is reeling under the volatile global demand environment for quite some time now.

Power stocks are currently trading firm led by Tata Power and Reliance Power. A leading business daily has reported that Tata Power is expecting its coal imports to increase three times during the current fiscal. As per the company's management, the expected import volume stands at 15 m tones. In FY12, the company imported a total of 5.5 m tonnes. The need for importing more coal is on the back of the company commissioning its new units. As per the company, the second unit of 800 MW at Mundra in Gujarat is expected to be commissioned by August. This is part of the company's and the country's first ultra mega power plant (UMPP) at Mundra. This project will have a total generation capacity of 4,000 MW once all five units become fully operational. In order to keep costs under control, the company is looking to mix some high grade imported coal with some low grade variety imported from Indonesia. Further, acquisition of overseas coal blocks is also on the cards. The company's management is of the view that the Government needs to facilitate bilateral deals to secure energy assets overseas.