Strong from start to finish

Tue, 21 Dec Closing

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Indian indices had a good day today and were trading in the positive territory throughout. But, gains were not seen across the board. Metal and banking stocks shined today, while pharma and IT stocks could barely keep afloat. The BSE-Sensex closed higher by around 171 points (0.9%), while the NSE-Nifty gained around 54 points (0.9%). The smaller indices also managed to rack up gains. The BSE Midcap closed higher by 0.8%, while the BSE Smallcap closed higher by 0.9%.

As regards global markets, Asian indices all closed in the green today. This was amidst tensions cooling off between North and South Korea.

European indices have also all opened in the green, ahead of the Christmas break. However, volumes were thin, with investors now looking towards 2011. The rupee was trading at Rs 45.21 to the dollar at the time of writing.

Indian FMCG companies have been nothing but defensive in 2010. There was a huge spike in mergers and acquisitions in the sector, with 13 acquisitions completed so far. These were mainly led by Godrej Consumer, with 7 acquisitions. These included a number of global forays right from Africa to Latin America. Marico and Dabur tied at second place with 2 buyouts apiece. The total value of these deals could not be ascertained, as some of the deal values were undisclosed. MNC biggie, Reckitt-Benkiser was also not to be left behind with its Rs 33 bn buyout of Paras Pharmaceuticals. Despite higher input costs, and rampant competition, the Indian FMCG industry has a rosy future ahead. Booz & Company expects the sector to grow at a base rate of 12% annually to become a Rs 4 trillion industry in 2020.

In order to meet the increasing gap between demand and supply of coal, Coal India Limited (CIL) and Shipping Corporation of India (SCI) signed a memorandum of understanding today (MoU) for the import of coal. Coal is a key raw material, used in satisfying the energy demands of most manufacturing companies. These two companies will be part of a 50:50 joint venture, engaged in importing 25 m tonnes of coal a year. However, the vendor of the coal has still not been decided. CIL has shortlisted 3 companies for the long term imported coal supply contract. The contract will be finalised in March, and will involve importing 250 m tonnes of coal over 10 years. CIL had earlier set a target to import about 6 m tonnes in FY11. Power stocks closed mainly in the positive for the day. However, Coal India closed in the negative.

State run energy major, Indian Oil Company (IOC) is losing Rs 1.8 bn per day in revenues. This is because the company is selling diesel, LPG and kerosene below their imported cost. Oil prices have been rising to around US$ 90 per barrel. This is due to the extremely cold winters in the North and rising commodity prices across the board. While petrol has been deregulated, oil-marketing firms (OMCs) are still losing money on diesel and other domestic fuels. These are still subsidized in order to keep inflation under control. IOC is losing Rs 6.1/litre of diesel, Rs 17.7/litre of kerosene and Rs 272.2/ domestic LPG cylinder. At current oil prices, IOC will lose Rs 378 bn in revenues, this fiscal. Cumulatively IOC and other state-run OMCs, Hindustan Petroleum Corp and Bharat Petroleum Corp, are projected to lose Rs 684 bn in revenue on fuel price subsidies in FY11.