Profit booking towards the end of today's trading session led the Indian markets to cut their morning gains and fall sharply into the red towards the end. The BSE-Sensex closed lower by about 250 points or 1.2%, while the NSE-Nifty ended lower by about 80 points or 1.3%. BSE Mid Cap and BSE Small Cap ended the day on a weak note as well with their respective indices down by about 1.8% and 2% respectively. Stocks from the capital goods, realty and FMCG spaces were amongst the least preferred ones today.
Stock markets in other parts of Asia closed on a mixed note. Hong Kong and Japan up by about 0.1% and 0.7% respectively, while China ended lower by about 0.3%. The rupee was trading at Rs 61.9 to the dollar at the time of writing.
Stocks of FMCG companies ended the day on a weak note with Tata Global Beverages, Dabur and ITC being the key losers. Stocks of FMCG players have been seeing a certain amount of pressure over the past few weeks. This is on the back of news relating to the slowing volumes that have been making rounds. As reported in a leading business daily, the top managements of FMCG companies are seeing consumption slowing in the premium segment products, largely in the urban markets. As reported, volumes have been growing at the pace of 16% YoY in rural markets, while they have been growing at about 12% in urban parts of the country. As such, to offset the impact of the slowdown in consumption in urban markets, FMCG companies have been looking at rural markets to boost volumes. This trend is expected is expected to continue going forward, at least till the time the economic and political sentiments become better. However, whether inflation worries will become an area of concern in the rural markets itself is something that needs to be looked out for in our view.
Stocks of automobile manufacturers ended the day on a weak note with Mahindra and Mahindra, Tata Motors and Bajaj Auto being the top losers. As per leading financial news daily, 2013 year-end closed on a pessimistic note with respect to car sales that witnessed 5% to 7% fall in the month of December. Higher interest rates, rising fuel prices and subdued economic conditions restricted passenger car sales growth during the year. Despite discounts and freebies, car sales volumes diminished from 1.94 lakh units in December 2012 to 1.84 lakh units in December 2013. Barring Maruti Suzuki and Hyundai Motor India which posted single digit growth, all other players failed to post a positive growth. Moreover, the testing times for passenger vehicle segment are expected to continue for the next 3 to 6 months. Even strong players and outperformers like Mahindra & Mahindra faltered on account of hike in excise duty on SUVs and diesel prices. Market sentiments continue to play spoilsport despite all the efforts made to control the inventory. While the auto industry continues to post negative growth due to sluggishness in economic activity, the automakers are hopeful of recovery, though an immediate turnaround is a little unlikely.