Markets trading flat with positive bias

Mon, 23 Aug 11:30 am

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After starting today's session on a positive note Indian indices have managed to hold on the gains. However, other key Asian markets are in the red with Nikkei (down 0.6%) leading the pack of losers. Currently heavyweights in the Sensex are trading flat with stocks from consumer durables and PSU space leading the gains. However, stocks from banking and FMCG space are witnessing some selling activity.

Currently, the BSE-Sensex is trading up by around 15 points, while the NSE-Nifty is up by about 6 points. However, strong buying interest is witnessed amongst the mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.6% and 1% respectively. The rupee is trading at 46.59 to the US dollar.

Auto stocks are trading positive with TVS Motor and Amtek Auto leading the gains. Maruti announced that it plans to limit its exports to 15% of total output. Facing increasing domestic competition the company intends to concentrate on its market in India. During the April-July 2010 period, the company exported only 15% of its output.

The company needs to be well aware of changing tastes and preferences, make quick adjustments, and expand capacity to keep up its market share in the domestic market. This fiscal Maruti saw its market share drop below 50% for the first time. According to the Society of Indian Automobile Manufacturers (SIAM), the car company sold 2,82,488 cars during the April-July period, representing a 47.7% share in the overall 5,92,405 units market. Last year, it had a 53.1% share of the 4,40,069 units car market, with sales of 2,33,811 units in the same period. Tata Motors, Ford India and General Motors India have increase their Indian presence following a good response to their small car segments. These companies contributed to the fall in Maruti's market share. The company also needs to scale up its R&D capabilities for faster launches of new models and improved old-models for the Indian market

FMCG stocks are trading mixed with ITC and United Spirits leading the pack of losers. However, Dabur and Nestle India are trading strong. Procter & Gamble Hygiene and Health Care Ltd. announced its FY10 results recently. Topline increased 9.2% YoY during the quarter on the back of strong performance by the company's healthcare and feminine hygiene segment. Operating (EBITDA) margins for the company fell by 26% to stand at 9.9%. This fall in operating margins was due to sharp increase under all heads of operating costs (as a percentage of sales) during the quarter. Net profit for the quarter fell by 79% on the back of lower operating income and lower other income, partially offset by lower effective tax rate.