Indian share markets turn negative

Tue, 24 Dec 01:30 pm

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After opening in the green, Indian share markets slipped below the dotted line in the post-noon trading session. Majority of the sectoral indices are trading in the green with capital goods, consumer durable and pharma stocks being the biggest gainers. Only metal and banking stocks are trading in the red.

BSE-Sensex is down 68 points and NSE-Nifty is trading 13 points down. BSE Mid Cap is trading up 0.4% and BSE Small Cap index is trading up 0.8%. The rupee is trading at 61.8 to the US dollar.

Retail stocks are trading mixed with Shopper's Stop and Future Retail being among the major gainers whereas Koutons Retail and Trent Ltd are trading in the red. As per a leading financial daily, Titan Industries is expecting its third quarter to remain lacklustre in the wake of weak consumer sentiment and spending. For H1FY14, sales and net profit for the company grew by 21.3% YoY and 9.8% YoY respectively largely on account of good performance during the first quarter.

As per the company consumers are postponing their discretionary purchases for the rest of the year which is affecting their topline growth. Reportedly, the company earns 80% of its revenues from the jewellery segment and balance from watches and accessories. Apart from sluggish demand, even regulatory requirements such as upfront cash payments on gold have pulled up Titan's cost of buying gold. To add to this, the government has raised the import duty on gold to an all-time high of 10%. While the company has an advantage of having direct import licence to source all its requirements, RBI's new rule of exporting 20% of gold imported is acting an impediment for the company. Titan Industries is exploring the option of exporting but the company believes exports fetch relatively less margin. The company plans to add a little over 100 stores in the fourth quarter of FY14 and 250 stores in FY15. The company expects to spend Rs 2 bn in capital expenditure in FY15 out of which Rs 600 m is set aside for retail expansion. Titan Industries is taking measures to reduce overhead costs and is setting up a stainless steel plant in Coimbatore that will cut down costs on importing Chinese cases.

Most of the private bank stocks are trading in the red with J&K bank and IndusInd Bank being among the major losers whereas Development Credit Bank and ING Vyasya Bank are a few stocks trading in the green. As per a leading business daily, banks are looking at new segments for growth in their advances as corporate accounts have slowed down. There has been slump in auto sales, real estate is showing signs of sluggishness, and the corporate world is shying away with major expansion in the light of high interest rates. However, growth in the personal loan segment has been holding up despite the slowdown. Reportedly there have not been many delinquencies in the segment. Bank has lowered rates on personal loans. HDFC Bank offers attractive rates on personal loans to its elite customers. The bank's personal loan segment grew 26% YoY during FY13. And it has grown by 10% until 1HFY14. Federal Bank is offering overdraft facilities to its salaried account holders whereas Indian Overseas Bank has reduced interest rate on consumer loans by 2% to 13.5%. However, it may be noted the cost of servicing these loans are higher on account of small ticket size and handling of large volumes.