Indian indices continue remain upbeat as the finance minster has started presenting the 2011-12 Union Budget. Stocks from PSU and oil & gas space are trading firm while stocks from the metal and auto space are trading weak.
The BSE-Sensex is up by 144 points while NSE-Nifty is trading 46 points above the dotted line. BSE Midcap index is up by 1.1% while BSE Small cap index is trading 1% above Friday's closing. The rupee is trading at 45.24 to the US dollar.
Auto stocks are trading weak led by Hero Honda and Tata Motors. As per a leading financial daily, Maruti Suzuki is expecting sales to grow by over 25% YoY to about 380 bn in the current financial year. This impressive growth according to the company's spokesperson will come of the back of robust demand. However, the company is anticipating a slowdown in volume growth in FY12. While the Maruti has achieved a 27% YoY volume growth so far this fiscal, it expects growth to slow down to 12-14% YoY in FY12. It may be recalled that Maruti has reported total sales of Rs 301 bn for FY10. In the first nine months of FY11, Maruti's sales grew from Rs 216 bn to Rs 273 bn, a growth of 26.3% YoY.
FMCG stocks are trading mixed with Henkel India and Hindustan Unilever Limited (HUL) trading firm and Godrej Consumer and Marico trading weak. As per a leading financial daily, FMCG major HUL is planning a 15 day promotional campaign for its brands 'Lifebuoy' and 'Domex' at modern retail outlets. This is seen as an attempt by the company to take advantage of the recent difficulties faced by its rival Reckitt Benckiser. It may be recalled that Reckitt, the manufacturer of Dettol antiseptic and Harpic toilet cleaners had recently reduced its trader marginsfrom 16% to 14%. This the company had done to protect its margins which have been affected by rising input costs. Reckitt had also cut general trade margins, from 12% to 10% for brands such as Harpic and Cherry shoe polish, and distributor's margins to 5% from 7.5% for Dettol antiseptic lotion.
HUL's new move will put pressure on Reckitt to resolve the matter at the earliest. However if they don't take action it would indicate that modern trade is not as important for Reckitt as to maintain its margins. This could in which case be a big positive for HUL.