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Firm close for Indian indices
Mon, 17 Feb Closing

The Interim Budget presented by the Finance Minister did not do much in terms of enthusing investors as the Indian equity markets traded firm but largely within a range today. While the BSE Sensex today closed higher by 97 points, the NSE-Nifty closed higher by 25 points. Both the BSE-Midcap and the BSE-Smallcap closed flat. Gains were largely seen in auto, banking and healthcare stocks.

As regards global markets, Asian indices closed firm today while European indices have also opened in the green. The rupee was trading at Rs 62.02 to the dollar at the time of writing.

Most of the food stocks closed weak today with the key losers being Britannia, Nestle India and Tata Global Beverages. Nestle India had announced its results for the fourth quarter and full year ended December 2013. For the quarter, the company's sales grew by a mere 4.6% YoY, while profit growth was also subdued at 1% YoY. Local sales grew 3.7% YoY mainly on account of higher net realization and change in product mix. But it was the exports to affiliates that gave some boost to sales as they were up 21% YoY. The relatively decent performance of some of its core products such as Maggi noodles, Nescafe and Kit Kat managed to counter the headwinds faced by some of the other businesses. The year as such has been challenging for the company and many other FMCG and food players. Because of inflation and the slowdown in the Indian economy, consumers have cut back on their budgets and this has hurt many players from the sector.

Most of the stocks from the auto sector closed firm today with the key gainers being Mahindra & Mahindra (M&M), TVS Motors and Maruti Suzuki. The interest in these stocks could largely be attributed to the excise duty cuts announced by the Finance Minister in the Interim Budget 2014. While the duty on small cars has been reduced from 12% to 8%, the duty on sports utility vehicles (SUVs) has been slashed from 30% to 24%. For large and mid-segment cars, the duty has been reduced to 20%. The auto industry has been facing several headwinds in the past couple of years in the form of economic slowdown, firm interest rates and fuel prices and inflation. Because of these factors, demand for automobiles has considerably waned and most of the auto players have seen de-growth in volumes. Whether the excise duty cuts helps in bolstering demand in the coming months remains to be seen.

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