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Banking Stocks Tumble
Wed, 10 Feb Closing

The Sensex fell below the 24,000 mark amid heavy selling activity in banking stocks and weak Asian markets. While the BSE-Sensex closed lower by 262 points, the NSE-Nifty closed lower by 82 points. The S&P BSE Midcap and S&P BSE Small Cap also continued to be weak and finished lower by 1% and 1.4% respectively. Losses were largely seen in realty, healthcare and banking stocks.

Tokyo's Nikkei 225 dropped sharply by another 2.3%, adding to Tuesday's 5.4% tumble. The index has lost more than 20% since mid-2015. Over the past few days, the yen has been rising against the US dollar, despite the Bank of Japan's recent introduction of <negative interest rates> There were sharp sell offs in Singapore and Australia as well. European markets are trading higher today with shares in Germany leading the region. The DAX is up 2.41% while France's CAC 40 is up 2.02% and London's FTSE 100 is up 1.23%.The rupee was trading weak at 67.88 against the US$ in the afternoon session.

According to an article in The Economic Times, Government has exempted state-owned ONGC and Oil India from payment of fuel subsidy in the third quarter ended December 31, as slump in oil prices dented their revenues.

As per a new fuel subsidy sharing formula approved last year, upstream firms ONGC and OIL have to make good any revenue loss incurred by fuel retailers on selling kerosene through PDS and domestic LPG after taking into account the fixed subsidy provided by the government.

For the October-December period, retailers Indian Oil Corp (IOC), Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL) lost Rs 61.49 billion in revenue on selling kerosene and LPG at government fixed retail price. As per the agreed formula the government was to pay a subsidy of Rs 12 per litre on kerosene and Rs 18 per kg on LPG. The unmet revenue loss after accounting for this subsidy was coming to close to Rs 3 billion. For 2015-16, the government has approved budgetary support for PDS kerosene under-recovery at a rate of Rs 12 per litre and the remaining under-recovery will be borne by the upstream companies.

Oil & gas sector stocks finished the day on a negative note with Cairn India and MRPL leading the losses. The combination of plunging crude oil and fears over the Chinese economy have been attributed to the stock market's decline in 2016. In this, the market decline has been the worst for small cap stocks (Subscription Required).

According to a leading financial daily, GlaxoSmithKline Consumer Healthcare will focus on driving consumption through targeted communication, innovation, and expansion of distribution of its products. This comes at a time when the FMCG sector continues to battle macro-economic challenges.

In a bid to grab new consumers in both urban and rural markets, GSK Consumer Healthcare will reportedly also focus on introducing innovations. Recently the company launched Chocolate Horlicks, especially targeted at the North and West regions, focused on taste as well as nutrition. The company has been focusing on increasing accessibility of its products through the right price points and packs and be available in more stores. It recently ramped up distribution of its products to about 3.3 million stores, adding about 200,000 stores.

The company's revenues were impacted in the quarter ending December 2015, due to recent floods in the state of Tamil Nadu, which is a huge market for both Horlicks and Boost. The company, however, reportedly said it continues to be a market leader in the health drink category with 59.1% in terms of value share and 67.3% in volume share.

The FMCG sector languished in red today with Nestle and United Spirits leading the losses. Recently a lot of FMCG companies announced their December quarter results. The companies have been reporting sluggish growth. Revenue growth for companies such as HUL and ITC has fallen from double digit to single digit in recent quarters

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Jun 23, 2017 02:09 PM

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