Auto, pharma aid in cutting losses

Fri, 22 Jun 01:30 pm

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While continuing to trade well below the dotted line, the Indian equity markets shed a portion of their losses as buying activity picked up in stocks forming part of the auto, healthcare and Information Technology spaces. Stocks from the metal and capital goods sectors are amongst the top underperformers currently.

The Sensex today is trading lower by about 90 points (0.7%), while the NSE-Nifty is trading lower by about 40 points (0.8%). The BSE Mid Cap and BSE Small Cap indices are trading lower by about 0.4% and 0.2% respectively. The rupee is trading at 57.24 to the US dollar.

Banking stocks are currently trading weak with Axis Bank, ING Vysya Bank and Yes Bank leading the pack of losers. It is reported that Yes Bank is planning to raise quasi capital to the tune of Rs 7.5 bn by the end of the current year. In addition to this, the bank is looking at raising about US$ 300 - 400 m during the next year either through the Global Depository Receipt (GDR) route or the Qualified Institutional Placement (QIP) route. At the end of FY12, the bank's capital adequacy ratio stood at a comfortable rate of 17.96% as against 16.5% reported the year before.

The leading business daily which reported the above news also discussed the interest rates with the bank's senior management. As per the management, it does not have any plans to change the interest rates for the time being given the status quo by the Reserve Bank of India last week. The bank's base rate (the minimum lending rate) is currently pegged at 10.5%.

FMCG stocks are currently trading mixed with Colgate, Godrej Consumer and Emami trading firm while Marico and Dabur are trading weak. As per a leading financial daily, the implementation of the amendments related to pack-size of packed consumer goods that was to come into effect from 1st July has now been deferred to 1st November 2012. Additionally the government has also issued amendments to standard pack-size regulations. As per the revised regulations, packs of Rs 10 or below can have non-standard pack-sizes. Even packs weighing below 25/50 grams do not have to comply with pack-size regulations. However in case of multi-packs, every package is required to comply with standard pack-size provisions. The revised regulations provide some respite especially in the volume-driven small-pack segment. But FMCG companies will continue to face challenges in larger packs after the flexibility of introducing intermediate pack-sizes to drive higher sales will diminish. As a lot of FMCG companies have been resorting to non-standard pack-sizes, the implementation of regulations is likely to have some impact on their turnover.