Selling intensifies in final hour

Tue, 16 Aug Closing

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Indian stock markets began the day's proceedings on a positive note today. However, as the day progressed profit booking began to take its toll and by the afternoon session, the indices were finding it difficult to stay afloat. Selling pressure intensified in the final hours and led the indices to close well into the red. While the BSE-Sensex closed lower by around 109 points (down 1%), the NSE-Nifty closed lower by around 37 points (down 1%). The BSE Midcap and BSE Small cap were not spared either as they as they closed lower by 2% each. Losses were largely seen in metals, oil & gas and banking stocks.

As regards global markets, Asian indices closed mixed today while European indices have opened in the red. The rupee was trading at Rs 45.30 to the dollar at the time of writing.

Barring Tata Motors, most auto stocks closed weak today. As per a leading business daily, Bajaj Auto is looking to bolster its exports over the next three to four years. The company sold over 1 m units of two-wheelers and three-wheelers in the last fiscal overseas and plans to increase this to 2 m units in the said period. It must be noted that in FY11, Bajaj Auto witnessed a 35% YoY growth in exports which accounted for around 28.5% of the company's total sales during the year. Further, the company intends to focus on the markets in Asia and Africa to up the ante for exports given that both these regions had seen strong growth in sales in FY11. It must be noted that in 1QFY12 too, Bajaj Auto witnessed a strong 30% YoY growth in exports which helped bolster overall sales given that domestic sales grew by only 10% YoY. What is more, as demand is likely to come under pressure in the domestic market on account of rise in fuel prices and interest rates, in the medium term at least the company will be banking on exports doing well. The stock closed lower today.

FMCG stocks closed mixed today. While Dabur and Marico found favour, Colgate and Hindustan Unilever closed in the red. As per a leading business daily, FMCG major Dabur is looking to enter the Indian aroma products market by expanding the portfolio of its existing air freshener brand 'Odonil'. The company is aiming to generate sales of Rs 3 bn from this segment by 2015. At present, 'Odonil' has amassed sales of Rs 1.3 bn. Dabur will launch a range of aroma products such as traditional oil burner, potpourri, pillar candle and aromatic floating candle under the 'Odonil' brand. It must be noted that currently the size of the Indian air fragrances market, including the traditional agarbattis, has been pegged at around Rs 20 bn. The Mysore-based NR Group currently dominates this market by selling Cycle brand of agarbattis. As far as marketing is concerned, Dabur is in talks with retail chains and other lifestyle stores to stock its products. Moreover, the company also plans to leverage on its existing distribution network of 'Real' juices to sell these products. It must be noted that in 1QFY12, Dabur's consumer care division, which accounts for 78% of total sales, witnessed a robust growth of 35% YoY.