FMCG stocks down on profit booking

Mon, 27 Sep 01:30 pm

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Continuing to trade well above the dotted line, the Indian markets moved in a rangebound manner during the previous two hours of trade. Currently, stocks from the metal, realty and energy spaces are amongst the top gainers, while FMCG stocks are bearing the brunt of profit booking.

The BSE-Sensex is currently trading higher by around 160 points (up 0.8%), while the NSE-Nifty is trading higher by about 40 points (up 0.7%). Stocks from the mid and small cap spaces have also managed to find favour as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.8% and 0.7% respectively. The rupee is trading at 45.06 to the US dollar.

Oil and gas stocks are currently trading firm led by IOC, ONGC, Essar Oil and Reliance Industries. A leading business daily has reported that oil marketing major BPCL is looking at investing Rs 500 bn over the next five years. These funds would be spent towards increasing refinery capacities as well as for acquisitions of oil and gas assets overseas. In addition, the company plans to invest in power projects. Out of this amount, nearly 56% of the amount will be spent towards the former i.e. towards increasing refinery capacities and upstream activities. As per the company's senior management, the proposed expansion is aimed at increasing revenues, which would propel the company's growth in new businesses.

As per plans, BPCL will be increasing its refinery capacity by about 50%. This it is doing by setting up a refinery at Bina in Madhya Pradesh, through a joint venture with Oman Oil Company. For the same, it would be investing nearly Rs 120 bn. It is also expanding capacities at its existing facilities at Kochi and Mumbai. As part of its power business, the company plans to enter the business by partnering with an initial equity investment of about Rs 6 to 10 bn. Funding for the same will be through a mix of oil bonds, internal accrual and debt. As for its plans in acquiring gas assets, the company is looking for opportunities in countries such as Australia and Indonesia.

Auto stocks are currently trading firm led by Tata Motors, Bajaj Auto and M&M. A leading business daily has reported that two-wheeler major, Bajaj Auto is all set for another round of expansion at its Pantnagar unit. The investment towards this will be around Rs 750 m. As per the company, production at this unit was being ramped up to 1.8 m units from 1.2 m units per year in anticipation of a strong demand and the overall boom in the auto space. During the previous year, capacity was doubled to 1.3 m units. As of now, the company produces two of its models from this unit - Discover and Platina. It may be noted that the company gets tax benefits from tax incentives at this unit. This includes tax sops as well as a 10 year long full excise duty rebate.