Metal, IT stocks keep markets firm

Thu, 21 Apr 11:30 am

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Indian stock markets continue to trade firm on buying interest in heavy weights over the last two hours of trade. Stocks from the metal and IT space are the biggest gainers while stocks from the pharma and power space have gained the least.

The BSE-Sensex is up by 210 points while NSE-Nifty is trading 55 points above the dotted line. BSE Midcap index is trading up by 0.6% while BSE Small cap index is trading 0.7% above yesterday's closing. The rupee is trading at 44.28 to the US dollar.

FMCG stocks are trading mixed with Pidilite Industries and Marico trading firm while Gillette India and P&G Hygiene are trading weak. As per a leading financial daily, Godrej Consumer Products Limited (GCPL) plans to employ a strategy of exchange of technology rather than brands transfer across product categories in Indonesia, Argentina and Africa. For this reason, bringing acquired brands to India is unlikely. This is because while the brands are number one in their respective markets, they have low brand equity in India. Hence, bringing in a new brand would be the same as building a brand from scratch.

However, in categories which have no overlaps, GCPL would consider the possibility of introducing international brands. For example, GCPL has exited the air care and hair care categories as a result of Sara Lee's brands like Ambi Pur, Kiwi and Brylcream being sold to P&G and Unilever. The company's spokesperson has stated that GCPL is considering re-entering these categories and would consider brand transfer in these categories. Globally, GCPL's ambition is to become the number two player in household insecticide business. It would be competing with big MNCs such as SC Johnson and Reckitt Benckiser in this business.

PSU Banking stocks are trading mixed with Allahabad Bank and SBI leading the pack of gainers. However, Oriental Bank and Indian Overseas Bank are trading weak. As per a leading financial daily, SBI has discontinued its teaser home loan scheme. The scheme that benefitted over 0.4 m home buyers in India will be withdrawn from May 1. Under the scheme home buyers could avail of loans at lower rates initially. RBI fears defaults from such borrowers once the rates go up after initial period of 3 years.

The State Bank of India has replaced the existing home loan structure by a new lending structure which will raise the interest payment of customers. It may be noted that to discourage banks, RBI had earlier increased the provisioning requirement on teaser loans by five times to 2%. SBI is in talks with RBI for a waiver.