Although trading firm, the Indian markets did witness some volatility as they shed a portion of their gains during the previous two hours of trade. However, the broader market breadth remains positive with the gainers outnumbering the losers by 2.6 to 1 on the BSE. Buying activity is being witnessed in stocks from the realty, metal and banking spaces. IT and FMCG stocks are the top losers at present.
The BSE-Sensex is trading higher by about 40 points, while the NSE-Nifty is trading higher by about 15 points. Small and midcap stocks however seem to have garnered investors' interest as the BSE-Midcap and the Smallcap indices are trading higher by about 0.9% and 1.3% respectively. The rupee is trading at 44.56 to the dollar.
FMCG stocks are trading weak with HUL, ColgateMarico and Godrej Consumer Products being the key losers. Marico announced its 4QFY10 and FY10 numbers yesterday. During the quarter the company reported a topline growth of about 6% YoY. This growth was largely led by a strong volume growth during the quarter. As operating expenses increased at a slower pace as compared to revenues, the company saw an increase in operating margins, which expanded by 0.8% YoY to 14.1%. This expansion was mainly due to lower raw material costs (as a percentage of sales). However at the same time, employee, advertisement and sales promotion expense and higher other expenditure increased as a percentage of sales. Net profit during the quarter increased by 15% YoY. The strong growth in net profits was aided by higher other income, lower interest costs and a lower extraordinary loss. For the full year, revenues and net profits increased by 11% YoY and 23% YoY respectively.
IT Stocks are currently trading weak led by Wipro, TCS and Infosys. According to research and advisory firm Gartner, IT spending in India is likely to rise by 14% YoY to about US$ 67 bn. As per the firm, this will mainly be due to higher investments by retail and utility firms and government departments. Further, it expects the IT market (which includes hardware, software, IT services and telecoms) to grow at a compounded rate of 11% by 2013. Gartner believes the Indian market to grow at a steady pace on the back of an expansion and maturity of the final customers and clients. With clients understanding the benefits of IT, its acceptance will increase going forward. Apart from the hardware manufacturers, IT biggies such as TCS, Infosys and Wipro, which have renewed their focus on Indian markets, will be the major beneficiaries of the same going forward. However, at the same time one should not ignore that fact the global IT majors have also increased their focus on India over the past few years.