Most Asian stock markets have opened the day on a weak note with stock markets in Hong Kong (down 0.5%) and Malaysia (down 0.4%) leading the losses. The Indian stock markets have opened the day with marginal gains. Consumer durables stocks are trading firm. However, stocks in the FMCG, IT and power space are trading weak.
The BSE-Sensex is up by 21 points (0.1%), while the NSE-Nifty is up by around 4 points (0.1%). Mid cap and small cap stocks are also trading in the green, with the BSE Mid cap and BSE Small cap indices up by 0.1% and 0.2% respectively. The rupee is trading at Rs 52.44 to the US dollar.
Food stocks have opened the day on a mixed note. While the stocks of Britannia and Tata Global Beverages are trading in the green, Nestle India is facing selling pressure. Nestle India has announced its financial results for the first quarter of the calendar year 2012 (1QCY12). The company reported sales of about Rs 20.5 bn during the quarter ended March 2012, a rise of 13.1% year-on-year (YoY). Lower consumer confidence and a deteriorating economic environment were the main reasons for the lukewarm growth. Operating costs as a percentage of net sales reduced marginally by 0.8%. While other income grew by 6.6% YoY during the quarter, interest expenses shot up from Rs 0.7 m in 1QCY11 to Rs 22.7 m in 1QCY12. The effective tax rate was also higher by 2.9% during the period. As a result of lacklustre performance at both operating and no-operating level, net profits increased at tepid rate of 7.8% YoY. Net margins dropped marginally from 14.1% in 1QCY11 to 13.5% in 1QCY12. For its capital expenditure requirements, the company has drawn down US$ 21 m from Nestle SA during the quarter for a period of five years under the External Commercial Borrowing approval from Reserve Bank Of India (RBI).
Banking stocks have opened the day on a weak note with Syndicate Bank, Dena Bank and UCO Bank leading the pack of losers. Leading credit rating agency, Standard & Poor's (S&P) has lowered its outlook on 11 Indian banks. It has revised its outlook from stable to negative for these institutions. The list includes the country's largest lender State Bank of India (SBI) and ICICI Bank. As per the agency, the revision in outlook is consistent with the outlook on the sovereign credit rating of India. The rating on the country was downgraded by S&P yesterday. The Indian banks have seen their asset quality come under pressure in recent times. Though the outlook has been downgraded, however S&P has not downgraded the credit rating of any bank as of now.