Selling pressure intensifies towards the end

Tue, 17 Dec Closing

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After starting the day on a firm note, the Indian stock markets moved below the dotted line as selling pressures intensified as the day progressed. The BSE-Sensex ended with losses of about 50 points or 0.23%, while the NSE-Nifty closed lower by about 15 points or 0.25%. Gains were seen in stocks from the pharmaceuticals and consumer durables spaces, while those from the banking and power spaces were amongst the top underperformers today. BSE Mid Cap and BSE Small Cap closed the day on a flat note.

Asian markets closed the day on a weak note, with stock markets in Hong Kong, China and Japan down by about 0.2%, 0.5% and 0.2% respectively. The rupee was trading at Rs 61.9 to the dollar at the time of writing.

Stocks of FMCG majors ended the day on a firm note led by United Spirits, Nestle and ITC. The FMCG major Dabur is expecting an upbeat momentum in rural market and intends to focus on this segment going forward. The company has made massive investments on the rural distribution side. The management is confident to clock 10% volume growth for the full year FY14. The revenue growth is expected to be maintained at the current 15%-17% levels for the full year despite the macro constraints. The home care segment would continue to be the major growth driver that is expected to grow at 20-25%, followed by the beverage portfolio. This portfolio too is expected to clock 20%+ plus growth levels for the current fiscal. The company is sanguine about margins maintenance and anticipates no cut in advertising costs for FY14. In our opinion, Dabur has been able to report robust volume growth despite slowdown in discretionary spending. Going ahead, the company will continue to reap benefits from its enhanced rural reach and buoyant rural demand. Even on the international front the company is expected to benefit from the revival in the Namaste business margins.

Stocks of engineering companies ended the day on a mixed note with Alstom T&D and ABB India leading the gains, while Alstom Projects and Thermax were amongst the top losers today. In the month of November 2013, engineering exports declined by 14.6% on a month basis. However, when compared on a year on year basis, the same was up by about 14.7% YoY. As per the chairman of the Engineering Export Promotion Council, India (EEPC), this decline on a month on month basis raises doubts over the recovery that begun in the second quarter of the fiscal. Engineering exports include items ranging from motor vehicles, three-wheelers, bi-cycles, iron and steel, transport equipment, amongst others. The same aggregated to about US$ 4.8 bn in November 2013, as compared to US$ 5.6 bn in the preceding month i.e. October 2013. As per the body, the key reasons for the same were lesser demand from the US, which declined by about 8% on a year on year basis. Similar was the case with other markets such as Europe.