Indian share markets have been barely trading above the dotted line in the post noon trading session. Majority of the sectoral indices are trading positive with realty, auto and FMCG being the biggest gainers. Metal, oil and gas and power stocks are among the handful of stocks trading in red.
Majority of FMCG stocks are trading mixed with Lakshmi Energy and Henkel India among the leading gainers whereas Gillette India and Hindustan Unilever (HUL) are the biggest losers. According to a leading financial daily, FMCG companies are raising prices of personal care & household products by 5-15% to compensate for slowing offtake and to maintain margins. HUL hiked prices of soap brands Lux & Rexona by 11% and 16%, respectively. The FMCG major also upped the price of its Fair & Lovely skin cream by 13%. Procter & Gamble raised the prices of Head & Shoulders shampoo and Ariel detergent by 5% each. Colgate increased the prices of Max Fresh & Active salt toothpastes by 5% and 13.5%, respectively. These price-hikes have been effected despite softening price of commodities such as palm oil and coconut oil. High inflation has adversely impacted discretionary consumer spend. In September 2012 quarter, HUL reported a tepid 7% volume growth whereas Marico's Saffola brand reported single-digit rise in offtake. Therefore the latest price-hikes are seen as a measure to maintain earnings growth. As per Marico, the last two quarters of FY13 are expected to be challenging in the wake of slowdown in discretionary sales as the impact precipitates with a lag effect.
Most of the Banking stocks are trading in green with Yes Bank and South Ind Bank among the top gainers. As per the financial daily, India's private-sector banks Yes Bank Ltd. and Indus Ind Bank Ltd. are negotiating to acquire the Indian retail assets of UK based, Royal Bank of Scotland Group PLC, (RBS). The said development comes after; RBS failed to strike a similar deal with HSBC and had thus called it off in November 2012. Reportedly, RBS is looking to sell off the said asset since the last two years. RBS has 31 branches in India with a deposit base of Rs 130.4 bn and a loan book of Rs 125.4 bn.Bad loans comprise of 0.74% of the advances as of March 2012. Over the past few years, deposits and advances of RBS in India have shrunk, as it was in the process of selling its Indian Retail operations. Indus Ind and Yes Bank were trading up by 0.35% and 2.96% respectively.