Declining FMCG Sales, Shriram Properties IPO, and Buzzing Stocks Today

Mon, 6 Dec Pre-Open

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Indian share markets ended on a weak note on Friday.

Markets reversed their two-day winning streak with losses in index heavyweight Reliance Industries.

At the closing bell on Friday, the BSE Sensex stood lower by 765 points (down 1.3%).

Meanwhile, the NSE Nifty closed lower by 205 points (down 1.2%).

UPL and BPCL were among the top gainers.

Power Grid Corp and Reliance Industries, on the other hand, were among the top losers.

The BSE Mid Cap index ended on a flat note, while the BSE Small Cap index ended up by 0.3%.

Sectoral indices ended on a negative note with stocks in the energy sector, banking sector and FMCG sector witnessing most of the selling pressure.

Engineering stocks, on the other hand, witnessed buying interest.

Shares of KEI Industries and Torrent Power hit their respective 52-week highs.

Gold prices for the latest contract on MCX were trading on a flat note at Rs 47,580 per 10 grams at the time of closing stock market hours on Friday.

Why Indian Stock Markets Plunged on Friday

Covid fears: While scientists are still figuring out the potential harm that the new variant of coronavirus can cause, initial evidence has suggested that the virus may be highly infectious.

Meanwhile, the first cases of Omicron variant in India have been confirmed in two individuals in Karnataka.

Reports also suggest as many as 12 patients suspected to be infected with the Covid-19 'Omicron' variant have been admitted to Lok Nayak Jai Prakash Narayan (LNJP) hospital in Delhi so far on Friday.

Lack of conviction: While the Nifty made a smart pullback after slipping below 17,000 earlier last week, investors are unlikely to make bold bullish bets in the market till new triggers emerge. With the year-end close, some investors may also continue to book profits following a year of stellar returns.

IPO frenzy fizzles out: Star Health and Allied Insurance's Rs 72.5 bn initial public offering (IPO), the third largest this year and eighth largest ever, received poor response from investors.

This is the second large offering after digital payments major Paytm this year to receive a lukewarm response from investors, a sign that despite the IPO frenzy investors are discerning when it comes to pricing.

FIIs slow down: Concerns over rising omicron cases and valuations seem to have weighed on foreign institutional investor (FIIs) inflow. FIIs net sold shares worth Rs 9.1 bn in the Indian equity market on Thursday.

Profit booking: Apart from the above, losses were also seen as share market succumbed to profit-booking.

We will keep you updated on how these factors develop in the coming days and what effect they have on Indian stock markets. Stay tuned!

Speaking of stock markets, India's #1 trader Vijay Bhambwani talks about what it takes to become a successful trader, in his latest video for Fast Profits Daily.

Tune in to the video below to find out more:

Top Stocks in Focus Today

Among the buzzing stocks today will be KEC International.

Infrastructure engineering, procurement and construction (EPC) major KEC International said it has bagged new orders worth Rs 10.7 bn across various businesses.

Its transmission & distribution (T&D) business has secured orders for projects in India, the Middle East, Africa, and Americas.

While the railways business has secured an order for construction of railway siding in the conventional segment in India, the civil business bagged an order for infra works in the water pipeline segment in the country.

The oil & gas pipelines business has secured an order for laying of oil and gas pipeline, through the company's wholly-owned subsidiary, Spur Infrastructure.

The cable business has bagged orders for various types of cables in India and overseas.

KEC's order book continues to grow on the backdrop of orders secured across all our business verticals. The continuous orders in T&D have significantly enhanced their order book, especially in the international markets.

The company is currently executing infrastructure projects in 30+ countries and has a footprint in 105+ countries (includes EPC, supply of towers and cables). It is the flagship company of the RPG Group.

Vodafone Idea share price will also be in focus today.

Vodafone Idea stocks surged over 12%, hitting a 52-week high in the last hour of trading on the BSE on Friday.

The stock rallied on account of the telecom department returning bank guarantees to the tune of Rs 120 bn to Vodafone Idea.

The Department of Telecommunications (DoT) will return BGs worth Rs 200 bn that Vodafone Idea and Bharti Airtel had furnished to cover spectrum payments.

Since the spectrum payments have been deferred as per the new relief package, DoT will ask the telcos to furnish the borrowings a year before the deferred period is up.

Reduction in borrowings will benefit the telecom companies by decreasing banks' exposure to Vodafone Idea.

Currently, they have an exposure worth Rs 140 bn in the company. It would further help the company to raise credit and boost its chances of survival.

IDFC First Bank and Yes Bank have the highest exposure to the debt-laden telco. The State Bank of India also has an exposure of Rs 110 bn.

In the past two weeks since the telco announced hiking the tariff rates, the stock has clocked returns worth 33%. The tariff hikes will increase the company's average revenue per user (ARPU), which in turn, will lighten its financial strain.

FMCG Sales Decline in November

Sales of fast-moving consumer goods (FMCG) in India declined 14.4% in November 2021 sequentially following the festive surge after sales grew 21.3% month-on-month in October.

According to a report, the sequential blip in numbers came on the back of a reduction in the number of active kirana stores as they're typically shut on festival days (Diwali) and on the back of the lower stocking due to post-Diwali stock liquidation.

The post-Diwali season is usually referred to as a lull period after a surge of demand that begins with Independence Day sales in August, running up to Diwali.

However, on a year on year (YoY) basis, FMCG sales saw a value growth of 10.4% compared to November 2020.

The category-wise sales figures also point to a festive trend in which categories such as confectionery, which see high demand during the festive season, saw sales fall by 45.9% sequentially in November and 15.4% YoY.

Sale of commodities such as rice, pulses, etc. which are also consumed in larger quantities during the festive season, also saw a 13.8% sequential decline.

Beverages too saw a 23.2% decline in sales. This too is a category that sees an uptick in demand during the festive season, especially given that this is offseason for beverage makers.

A similar trend is seen in personal care as well, which fell 14.4% sequentially, while increasing 3.9% YoY. One business segment that continues to see a drop in demand is Home Care, driven by reduced consumer interest in hygiene products that was seen during the first wave of covid.

Shriram Properties IPO to Open on 8 December

Shriram Properties IPO will open for subscription on 8 December and close on 10 December. The shares are likely to list on exchanges on 20 December.

The firm has cut its offer for sale (OFS) size to Rs 3.5 bn from Rs 5.5 bn earlier. The total IPO size will now be Rs 6 bn against Rs 8 bn earlier. The offer consists of a fresh issue of shares worth Rs 2.5 bn and an OFS of up to Rs 3.5 bn.

This will be the second public listing of a property firm after Macrotech Developers Rs 25 bn IPO in April.

The proceeds from the fresh issue of Rs 2 bn will be used for repayment or pre-payment, in full or part, of certain borrowings availed by the company and its subsidiaries, Shriprop Structures, Global Entropolis and Bengal Shriram.

As of September 2021, the amount outstanding under its fund-based loan facilities was at Rs 7 bn.

How this pans out remains to be seen. Meanwhile, stay tuned for more updates from this space.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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