The Indian equity markets witnessed a volatile post noon trading session. Currently, the markets are trading marginally lower as selling activity was witnessed in stocks from the realty, banking and power spaces. On the other hand, stocks from the healthcare and metal spaces led the pack of gainers.
The Sensex today is trading lower by about 54 points (down 0.7%), while the NSE-Nifty is trading flat. Midcap and smallcap stocks are however trading firm with the BSE Mid Cap and BSE Small Cap indices trading higher by 0.2% and 0.5% respectively. The rupee is trading at 55.31 to the US dollar.
Stocks of FMCG companies are trading mixed with Godrej Consumer and GSK consumer trading weak while Marico and Dabur are trading firm. As per a leading financial daily, high inflation is pulling back discretionary spending by Indian consumers. As per studies by market research agencies IMRB International and Nielsen, sale of discretionary food items in the first half of 2012 was comparatively sluggish as compared to year-ago levels. The sales of packaged food products such as biscuits, noodles, chocolates, malted drinks; butter/cheese, soft drinks, ketchup and jams have slowed down during this period. However offtake of basic food items such as wheat, tea and coffee have retained their growth rate. Marico has said that companies will have to either go for more product innovations to attract new customers in the segment or circumvent price hikes to tide over the problem. Several FMCG companies are tying up with modern retailers to offer massive discounts on products to push sales. The slowdown in discretionary spends on foods is also reflected in the sales performance of food companies. Nestle, Britannia and Glaxo Smithkiline Consumer posted relatively slower sales growth of below 15% in 1QFY13. While Nestle is adopting a cautious tone, Dabur is more optimistic and has said that juices are still likely to grow more than many other foods categories because the category offers compelling health reasons and health consciousness is on the rise.
Auto stocks are currently trading mixed with Escorts, Ashok Leyland and Tata Motors, while Bajaj Auto, Hero Motocorp and TVS Motor are trading firm. It is believed that the Society of Indian Automobile Manufacturers (SIAM) is believed to be seeking cuts in excise duties from the government. This is on the back of the domestic car sales reporting a decline of about 19% YoY during the month of August 2012. This is reportedly the biggest drop in 10 months. Also, exports numbers declined by almost 27% YoY during the month, which the highest decline in more than 11 years. Given these facts and figures, SIAM is seeking a stimulus package for the industry for which it has termed to be 'now entering a desperate situation'. SIAM seems to be all the more worried as usually this is the time when wholesale numbers are usually picking up given the upcoming festive season. One possibility that the SIAM is looking for is lower excise duties, which the government increased during this year budget, especially for the commercial vehicles segment.