Markets tread higher led by IT stocks

Mon, 22 Nov 11:30 am

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After starting today’s session on a positive note, Indian indices have managed to hold on to their gains. However, other key Asian markets are trading mixed. Currently, heavyweights in the Sensex are trading strong with stocks from the IT and consumer durables space leading the gains. However, stocks from the power and healthcare space are trading flat.

Currently, the BSE-Sensex is trading up by around 157 points, while the NSE-Nifty is up by about 57 points. There has been some buying interest amongst the mid and small cap stocks as well with the BSE-Midcap and BSE-Smallcap indices trading higher by 0.4% and 0.7% respectively. The rupee is trading at 45.24 to the US dollar.

Steel stocks are trading flat with Bhushan Steel and Tata Steel leading the gains. However, Tata Sponge and Sesa Goa are trading in the red. In order to ward off competition from Chinese counterparts, Indian steel makers have decided to form a syndicate and acquire coal assets in overseas markets. This is likely to increase the supply of raw material and give a boost to the steel sector. The syndication is likely to be formed under SAIL’s vigilance which will lay out a roadmap to source key raw materials from overseas markets. It may be noted that India is facing acute shortage of coking coal, a key raw material input to manufacture steel. While 25-30% of the requirement is being met indigenously, 70% of it is imported. The prices of coking coal are also going through the roof. In such a scenario forming a consortium and sourcing raw materials from overseas markets will significantly improve the bargaining power of Indian steel companies.

FMCG stocks are trading mixed with Marico and Camlin trading firm while Dabur and Colgate are trading weak. As per a leading financial daily, Procter & Gamble (P&G) is planning to build a manufacturing plant in Chennai. This plant will be used to manufacture liquid detergent and is expected to be used as an export hub for neighboring countries. With the new manufacturing facility, P&G would become the first company to manufacture liquid detergent in the country. It may be noted that the Rs 120 bn laundry market is split equally between soaps and detergents. P&G has a 15% share in the laundry market while HUL has a 37% market share. P&G has been trying to catch up with HUL and in recent times we have seen aggressive marketing campaigns by both players. According to Mr. Bob McDonald, the global CEO of P&G, the company is looking to tap the bottom and mid segment of the market for growth and is looking to flood the Indian market with new products and enter the rural market in a big way. The company is looking at tripling its revenues from India within the next three to four years. As of now P&G has three subsidiaries in India, P&G Home products Limited, P&G Hygiene and Health Care Limited and Gillette