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Markets Close on a Negative Note
Tue, 9 Aug Closing

Indian equity markets came under pressure in the afternoon session after the Reserve Bank of India kept its policy interest rate unchanged. At the closing bell, the BSE Sensex stood lower by 97 points, while the NSE Nifty finished down by 33 points. The S&P BSE Mid Cap and S&P BSE Small Cap indices too closed the day lower by 0.4% and 0.5% respectively. Losses were largely seen in oil & gas, FMCG and metal stocks.

Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 0.71% and the Nikkei 225 rose 0.69%. The Hang Seng lost 0.13%. European markets are trading higher today with shares in Germany leading the region. The DAX is up 0.6%, while France's CAC 40 is up 0.47% and London's FTSE 100 is up 0.32%.

The rupee was trading at 66.96 against the US$ in the afternoon session. Oil prices were trading at US$ 42.98 at the time of writing.

According to a leading financial daily, Britannia Industries is looking at increasing the share of its rural sales to turnover to up to 50% in next five years and become a total food company. Currently, the company's rural sales is a "weaker segment" when compared to urban. It accounts for 30% of its total turnover.

Meanwhile, value segment accounts for 45% of the Rs 250 billion biscuit market in India. Reportedly, Britannia has a 9% market share here. The company is looking to ramp up its distributor network primarily, in the Hindi belt. The company also plans to boost its rural distributor network from 8,500 now to 10,000.

The company's strategy has mostly been to enter the rural markets through its value products under the "Tiger" brand. Once the distribution is established, Britannia looks to push its non-value products, mid-tier and premium offerings through the same channels.

Britannia is looking to invest close to Rs 4.5 billion to set up three greenfield plants in India over the next three years. The company's production capacity across these 37 units stand at one million tonnes. Britannia finished the day down by 1.2% on the BSE.

In another development, according to an article in The Economic Times, FMCG products and consumer durables will become cheaper once goods and services tax (GST) is rolled out next year. As per the report, the current practice of tax on tax will be gone once GST is rolled out. For example, VAT being charged on not just the cost of production but also on the excise duty that is added at the factory gate leading to cost build-up will no longer be applied. This will help bring down prices of a range of products from FMCG to consumer durables and electronics to readymade garments.

Speaking of GST, my colleague Vivek Kaul, has brilliantly explained what you probably did not hear about GST from the mainstream media. I strongly recommend that you download Vivek's free report on the GST, 'What the Mainstream Media DID NOT TELL YOU About GST.'

Selling activity was seen across majority of the textile stocks with Vardhman Textiles and Raymond leading the losses. According to an article in The Hindu Business Line, Raymond is planning to double the fabric business and to quadruple apparel businesses over the next five years. The company's apparel business size is over Rs 10 billion, while the present fabric revenues is about Rs 30 billion.

As per the reports, Raymond plans to boost apparels' revenues through network and channel expansion, stores innovation and expansion of MBOs (multi-brand outlets). The company has over 1,050 stores under different brands in 385 towns, while it sells its products through 17,000 MBOs across the country.

Raymond has proposed a capital expenditure of Rs 2.5 to 3 billion in this fiscal. About 40% of the capex will be invested in retail expansion. As per the reports, the company will open about 100 stores across all formats.

Under the fabric segment, Raymond recently launched fabric TechnoSmart which clocked sales worth Rs 70 million in Q1 of this fiscal. The company is reportedly targeting to garner topline of Rs 1 billion from Technosmart fabric in the next one year. The company is also working on its digital business through 'Omni channel strategy'. Raymond closed the trading day down by 3.8% on the BSE.

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Jul 16, 2018 12:21 PM