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IT boost for the markets
Thu, 25 Nov 11:30 am

Indian indices continued their northbound journey on buying interest in heavy weights over the last two hours of trade. Stocks from IT and consumer durables space are trading in the green while stocks from the realty and PSU space are trading in the red.

The BSE-Sensex is up by 159 points while NSE-Nifty is trading 34 points above the dotted line. BSE-Midcap is trading flat while BSE-Smallcap index trading 0.2% above yesterday's closing. The rupee is trading at 45.71 to the US dollar.

FMCG stocks are trading firm led by Archies Limited and Henkel India. As per market research firm A.C. Nielsen, rural FMCG market could go up to US$ 100 bn, almost 10 times from the current size, by 2025. It may be noted that categories such as soaps and shampoos have been growing faster in the rural market than in the urban markets. However, food categories continue to drive a bulk of the sales in these markets. Moreover, skin care products in the rural markets are growing at double the rate of that in the urban markets. Rural India has been targeted by marketers from all product categories since the last 3 years. This is because the rural employment guarantee scheme and the waiving off of farm loans of almost Rs 720 bn in 2008 helped increase the disposable income in the hands of the farmers and rural poor. Now, on the back of income boosted by a normal monsoon, rural consumers are moving up the consumption pyramid.

Retail stocks are trading mixed with Bata India and Provogue leading the gains. However, Pantaloons and Shoppers Stop are trading weak. India's largest jewellery and watch retailer, Titan Industries expects FY11 sales to increase 25% YoY on the back of expected new store launches during the year. Titan, which has 600 outlets, at present plans to add 80 more stores across formats by the end of this fiscal. It is also planning to open about 250 stores in FY12. The company also expects profit growth to be higher as margins have improved in the jewellery segment recently.

Titan has lately started exporting watches to South Africa and has plans to increase its market share in Asian countries. It may be noted that international watch sales currently account for 8% of its total watch sales and the company intends to increase this to 12% by FY2014/15.

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