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Sell-off drags markets in the red
Wed, 6 Jul 11:30 am

Indian stock markets pared their opening gains and traded in the red on account of sell off in heavy weights over the last two hours of trade. Stocks from the consumer durable and realty space are trading firm, while stocks from the banking and FMCG space are trading weak.

The BSE-Sensex is trading down by 11 points while NSE-Nifty is trading flat. BSE Midcap index is trading up by 0.1% while the BSE Small cap index is trading 0.3% above yesterday's closing. The rupee is trading at 44.37 to the US dollar.

Hotel stocks are trading mixed with Oriental Hotels and Hotel Leelaventure trading firm while The Indian Hotels Company Limited (IHCL) and Taj GVK are trading weak. As per a leading financial daily, IHCL's plans of constructing a landmark hotel on the Sea Rock Hotel site in Mumbai have run into rough weather. Sea Rock Hotel had been non functional since 1993 when a bomb blast damaged it extensively. IHCL had bought this property for Rs 6.8 bn with the aim to build a world-class convention and hospitality center. However, construction is now awaiting environmental clearance from the State Level Environment Impact Assessment Authority and Maharashtra Coastal Zone Management Authority. This is expected to take at least a year. As per the original plan, IHCL was to start construction at the sea-facing property early last year with the launch scheduled for 2013. But now, the new Sea Rock property is expected to become operational only by 2014.

Consumer goods stocks> are trading weak led by Dabur and Marico. As per a leading financial daily, US-based chocolate and confectionery major Hershey's and the Godrej Group have called off their joint venture. This is due to management difference between the two partners in running the entity. As per the agreement, Hershey's will sell its 51% stake to Godrej Consumer Products Limited for an undisclosed sum. It may be recalled that the JV between Hershey's and Godrej was formed in 2007. While Hershey's had introduced only one product, i.e. its chocolate syrup, through this JV, Godrej had introduced its Nutrine range of confectionaries as well as its entire beverages range through this joint venture. The turnover of the JV is estimated at Rs 4.5 bn, of which brands owned by Godrej contributed about 85%. Hershey's will now operate on its own in the Indian processed food market. However, it remains to be seen whether Godrej will enter the chocolate segment as it is concentrating on its 3X3 strategy.

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