Profit booking takes toll

Thu, 18 Nov 11:30 am

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   09:30 am   

   01:30 pm   

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After starting today's session on a positive note Indian indices have registered a sharp down move and are currently trading in the red. However, other key Asian markets are trading strong. Currently, heavyweights in the Sensex are trading weak with stocks from realty and consumer durables space bearing investors brunt. However, stocks from the IT space are trading flat.

Currently, the BSE-Sensex is trading down by around 221 points, while the NSE-Nifty is down by about 65 points. Buying interest amongst the mid and small cap stocks is muted as well with the BSE-Midcap and BSE-Smallcap indices trading lower by 1.9% and 2.3% respectively. The rupee is trading at 45.55 to the US dollar.

The disinvestment department is in the process of identifying 8-10 public sector firms, ready for stake sale next fiscal. Although the disinvestment process is expected to begin with the share sale of ONGC next year but the main emphasis of the government is to take unlisted companies to the market. These include Cochin Shipyard, NBCC, Hindustan Latex and Rashtriya Ispat Nigam. Apart from this, the listed entities which are ripe for disinvestment include BHEL, CCI, MMTC, PFC, Neyveli Lignite and BEL. It may be noted that the government had decided to go in for stake sale in about 9 companies in FY11. So far, it has managed four, including Coal India. Nonetheless, the finance ministry is looking to raise large sum in FY12 as well, considering the huge fiscal deficit that needs to be narrowed.

Consumer goods stocks are trading mixed with Dabur and Gillette India trading firm and Pidilite Industries and P&G Hygiene trading weak. As per a report by research firm Booz and Company, Indian consumers are now uptrading and buying premier products across personal care and foods segment. This is in contrast to two years ago when consumers were downtrading in the wake of rising commodity prices and global economic crisis. The uptrading is driven by better paying jobs as the economy revives, greater workforce participation by women and an increasingly younger earning population.

The Indian consumer goods market is in fact expected to grow from its current size of Rs 1.3 tn to become a Rs 6.2 tn market by 2020. This is expected to be supported by the fast growing Indian upper middle class segment (households with annual income between Rs 500,000 and Rs 1 m). Within the broader consumer goods market, the Rs 50 bn health drinks and health foods market is expected to grow an annual rate of 10%, while the beauty products market is expected to grow by 15-20% a year for the next 10 years.