FMCG, realty stocks rally markets

Mon, 7 Feb 11:30 am

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Indian indices have slipped from the day's highs on profit booking in heavy weights over the previous two hours of trade. Stocks from the FMCG and realty space are trading firm while stocks from the pharma and consumer durables space are trading weak.

The BSE-Sensex is up by 75 points while NSE-Nifty is trading 16 points above the dotted line. BSE Midcap index is down by 0.2% while BSE Small cap index is trading 0.3% below Friday's closing. The rupee is trading at 45.57 to the US dollar.

Energy stocks are trading mixed with IOC and BPCL trading firm while Gail and Castrol are trading weak. As per a leading financial daily, London-based BP Plc is in talks with Reliance Industries Ltd (RIL) to buy a significant stake in the D6 hydrocarbon block in the Krishna-Godavari (KG) basin. This stake is believed to be between 30% to 45%. It may be recalled that (RIL) holds a 90% stake in the KG D6 field while the Canadian hydrocarbon explorer Niko Resources Ltd owns the remaining 10% stake. KG D6 field was hailed as the world's largest natural gas discovery in 2002.

The deal is expected to be a barter transaction with some compensation in assets and some in cash. BP, after the Deepwater Horizon spill in the Gulf of Mexico in April, has been on the lookout for new locations to invest in. RIL is expected to benefit from this deal by getting access to new advance technology as a lot of technological advances are taking place in this space. This development comes at a time when gas output at the offshore block has fallen to 50-52 million standard cu. m per day (mscmd) from over 60 mscmd in mid-2010.

FMCG stocks are trading mixed with Paper Products and P&G Hygiene trading firm while Henkel India and Godrej Consumer are trading weak. As per a leading financial daily, Hindustan Unilever Ltd (HUL) could further hike prices of its products. This is because input costs for the company continue to rise. While the company has taken several price hikes recently, these have not been sufficient to protect margins as inflation especially in commodities has been on the uptick. While the company's spokesperson has declined to comment on the impact of rising commodity prices on the company's margins, all commodities which form part of HUL's input have been increasing. At this point HUL is looking at judicious price increases as the market continues to be competitive. It may be recalled that HUL had recently revised prices upwards of its Lux and Liril soap brands by up to 10%.