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Global weakness weighs on Indian equity markets
Mon, 9 Jul 09:30 am

Weak US jobs data has led the Asian equity markets to open the week on a negative note. Markets in Hong Kong (down 1.5%), Korea (down 1.3%) and China (down 1.1%) are witnessing maximum losses in the region. The Indian equity markets have opened the day on a negative note as well. Stocks in the metals and power sectors are witnessing maximum losses.

The Sensex today is down by around 89 points (0.5%), while the NSE-Nifty is down by around 25 points (0.5%). Mid and small cap stocks are trading in the red as well with the BSE Mid Cap and BSE Small Cap indices down by around 0.5% and 0.3% respectively. The rupee is trading at Rs 55.89 to the US dollar.

Banking stocks have opened the day on a negative note with Canara Bank, Bank of Baroda and Bank of India leading the pack of losers. The country's largest lender, State Bank of India (SBI) has stated that it may not go ahead with any consolidation in the current year. The bank has stated that it is not looking at consolidating any of its associate banks this year as there are still several issues that need to be sorted out. SBI had consolidated two of its associates, State Bank of Saurashtra and State Bank of Indore in 2008 and 2010 respectively. It now has five more associates of which three are listed on the stock exchanges. As amalgamation of unlisted entities is relatively easier, the bank is expected to consolidate the unlisted associates, State Bank of Patiala and State Bank of Hyderabad first. SBI has stated that it may look at further consolidation next year.

FMCG stocks have opened the day on a mixed note with Godrej Consumer Products Ltd and Colgate Palmolive trading in the red while Hindustan Unilever and United Breweries are trading in the green. Major FMCG companies have stated that they may not undertake further price hikes in the quarter of July to September 2012. The companies have steadily increased prices over the past eight quarters due to higher raw material prices. However, most companies feel that any further increase in price would have an adverse impact on the volumes growth. Companies have also been helped by the softening in the raw material prices as commodity prices have showed signs of cooling off. FMCG majors like Emami and Dabur have stated that they may look at moderate price increases in selective categories. However, they would be adopting a cautious approach so as to not hurt their volumes and top lines.

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