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Consumer durable lead gainers
Mon, 27 Dec 11:30 am

Indian indices are trading in the green on buying interest in heavyweights over the previous two hours of trade. Stocks from the consumer durable and healthcare sectors are the top gainers. However, metal stocks are trading in the red.

The BSE-Sensex is up 87 points while NSE-Nifty is trading 25 points above the dotted line. BSE-Midcap is trading up by 0.6% while BSE-Smallcap index is trading 0.9% above Friday’s closing. The rupee is trading at 45.16 to the US dollar.

FMCG stocks are trading mixed with Marico and Colgate trading firm while Tata Global Beverage and United Spirits are trading weak. As per a leading financial daily, FMCG players are regaining their pricing power. Over the past six months, HUL has taken a price hike of 5-8% in soaps and detergents while Dabur has increased prices by 3-4%. Marico has also hiked price of coconut oil by 10-13% while Britannia Industries increased prices of select brands by 5-10%. The reason for this is the strong growth we are seeing in the economy. A 20% YoY hike in corporate India’s wage bill, strong hiring plans and a good monsoon has put consumers in the mood to splurge. The rural sector is also growing robustly with a rebound in agricultural output. This is boosting demand for bread and butter and FMCG goods like soaps, detergents and toothpastes. Moreover, in the last quarter, softening food inflation has seen consumers buying aspirational goods like skin care products, health supplements and processed foods. As a result of this demand, FMCG companies are now looking at expanding their margins.

Auto stocks are trading firm led by TVS Motors and Bajaj Auto. However, M&M and Eicher Motors are trading weak. Through the launch of Kizashi, Maruti Suzuki plans to enter the premium sedan segment in India within a month. Kizashi would be initially priced between Rs 1.8-2 m as the company plans to adopt the completely built unit (CBU) route for the first few models where the import duties are high. However, over time the prices may decline as the company may consider establishing its base in India rather than complete outsourcing. In India, Kizashi is expected to compete with brands like Honda Civic, Skoda Laura and Toyota Corolla Altis. It may be noted that right now the most expensive offering in Maruti’s portfolio is SX4, priced at about Rs 0.7 m. Thus, the launch of Kizashi will help the company understand the nuances of premium car selling in India.

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