FMCG, pharma lose investor favour

Tue, 21 Dec 01:30 pm

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The Indian markets continued to trade in a rangebound manner during the previous two hours of trade. Currently stocks from the banking, metal and realty spaces are leading the pack of gainers. They are followed by stocks from the consumer durables and IT spaces. On the other hand, stocks from the healthcare and FMCG spaces are amongst the key underperformers.

The BSE-Sensex is trading higher by about 150 points (up 0.8%) while NSE-Nifty is trading up by about 45 points (up 0.8%). The BSE-Midcap Index is trading up by 0.7%, while the BSE-Smallcap Index trading higher by 0.9%. The rupee is trading at 45.2 to the US dollar.

Auto stocks are currently trading firm led by TVS Motor, Ashok Leyland, Escorts and M&M. A leading business daily has reported that the Hero Group is looking at aggressively increasing its exposure to international markets soon after it signs a definitive agreement with its former Japanese partner Honda Motor Co. Ltd. The company has also mentioned that it would be using its own logo in the overseas markets. It must be noted that as per the joint venture agreement between the Hero Group and Honda Motor, Hero Honda was not allowed to export to markets where its Japanese partner was present. However, once this agreement is confirmed, the Hero Group could potentially compete directly with its Honda Motor in the international space.

The export market has been booming in recent times. One can definitely see that from the two wheeler giant's rival company, Bajaj Auto's sales numbers (nearly half the volumes come from exports). Export volumes for the company stood at about 675,000, which is higher by about 38% YoY. Hero Honda, on the other hand, exported about 91,100 units. As per the company, it is looking at exporting its products to many new regions, including Latin America, Africa and the Middle East.

Banking stocks are trading strong with Axis Bank, ICICI Bank and Yes Bank currently leading the pack of gainers. Most of the players in the sector are seeing renewed buying interest from investors on the back of reports on liquidity pressures easing. The RBI's move to lower the SLR to 24% from 255 earlier has brought relief to the liquidity starved sector. However, sale of bonds by infrastructure financing companies (IFCs) in the last quarter of FY11 is expected to see some additional liquidity drying up.

International bond sales in India climbed to US$ 11.2 bn this year from US$ 2.4 bn in 2009, with bank debt accounting for 60%. As India seeks funds for key infrastructure projects, foreign capital may prove useful.