Delayed buying takes markets higher

Wed, 14 Aug Closing

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Strong buying activity during the second half of the day led the Indian equity markets to end the day on a positive note. Barring stocks from the information technology and capital goods spaces, stocks across the board ended on a firm note with those from the automobiles, oil and gas and consumer durables sectors leading the pack of gainers. The BSE-Sensex closed higher by about 150 points today, the NSE-Nifty closed higher by about 43 points. BSE Mid Cap and the BSE Small Cap Cap closed on a firm note (up 0.7% and 0.4% respectively) as well.

As regards global markets, Asian indices closed on a mixed note. European indices have opened on a firm note. The rupee was trading at Rs 61.45 to the dollar at the time of writing.

Auto stocks ended the day on a firm note with Tata Motors, Bajaj Auto and Mahindra and Mahindra leading the pack of gainers. The stock of Tata Motors was the top gainer amongst stocks forming part of the BSE-Sensex on the back of the company's subsidiary Jaguar Land Rover (JLR) reporting strong volumes for the month of July 2013. As per reports, JLR sold 31,611 vehicles in July. This figure is higher by 21% YoY as compared to the same month last year. Sales of Jaguars stood at 6,157 units, which is higher by 65% YoY. As per the company, higher demand was witnessed in countries such as China and North America. This was largely due to the good response to the refreshed XJ and XF models. As for Land Rover, volumes were up by 14% YoY during the month. In the year till date, the combined volumes of the brands were up by 15% YoY. The stock of Tata Motors ended higher by about 10% today.

Stocks form the FMCG space have been quite shaky off late. The key concerns surrounding these companies include the overall slowdown which seems to have impacted the spending power. One could say that the impact on this sector has come in with a lag effect. During the quarter gone by, sales volumes seemed to have slowed down significantly. Another reason that may be depicting a slowdown is the high base effect. The overall headline inflation has also played a key role towards the same. This only leads to households going easy on the expense side. This is why certain companies are of the view that the premium segment whose demand depends on the discretionary spending of consumers has been impacted the most within the sector. What does all this mean for FMCG companies? Margin decline may be a possibility given that FMCG firms tend to boost their advertising expenses at a time when the overall demand seems to be slowing down. Nevertheless, FMCG stocks ended the day on a firm note with United Spirits, Colgate and ITC leading the pack of gainers.