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Informist, Monday, Dec. 9, 2024

By Anjana Therese Antony

MUMBAI – Fall in shares of fast-moving consumer goods and automobile companies pulled the benchmark indices down slightly Monday. Analysts said valuations in most sectors remain expensive despite the correction over the last two months. They also said that the growth in the domestic market is expected to be slower than what it was in the last couple of years. FMCG stocks were down due to a weak quarterly update by Godrej Consumer Products.

Godrej Consumer said it expects mid-single-digit growth in sales and volume growth to be flattish in Oct-Dec as the soaps and home insecticides segments are not expected to do well. The soaps category, which accounts for a third of the company's standalone revenue, was affected by a 20-30% year-on-year surge in prices of palm oil and its derivatives, the company said. The stock closed nearly 9% lower at INR 1,127.85 on the National Stock Exchange.

"Market had likely hoped for some recovery (in demand) in Oct-Dec, it being a festive season. But that did not happen," Amit Agarwal, senior vice president of fundamental research at Kotak Securities, said. Expectations of flat volume growth and a sharp hit to its home insecticide business are negative, Agarwal said.

The Nifty FMCG was the worst-hit sectoral index. It closed lower by 2.2%, with 14 out of 15 constituents in the red. Radico Khaitan was the only outlier, closing 2.6% higher. The fall in major FMCG stocks contributed to more than 0.1% fall in the Nifty 50, which closed 0.2% lower at 24619 points. The BSE Sensex ended 0.3% lower at 81508.46 points. The near-term support for the 50-stock index is pegged at 24590-24560 points and resistance at 24700-24800 points, a technical and derivatives analyst at a domestic broking firm said. 

Automobile stocks tumbled on expectations of slow improvement in demand for passenger vehicles. "Although rural markets offered some support, primarily in the two-wheeler category, marriage-related sales remained subdued," C.S. Vigneshwar, president of the Federation of Automobile Dealers Associations, was quoted as saying in a press release. Retail sales of passenger vehicles fell 13.7% on year in November due to weak market sentiment, limited product variety, and insufficient new launches, compounded by the shift of festival demand into October.

An analyst said that demand for passenger vehicles is expected to improve only by the second half of the next financial year. The Nifty Auto was the third-most sectoral laggard. The index closed 0.8% lower, with Tata Motors being the worst hit. The stock closed 2.2% lower. Losses in auto stocks led to nearly 0.1% fall in the Nifty 50 index.

On the other hand, some information technology stocks rose after HSBC Securities and Capital Markets (India) upgraded its rating and target prices. "Overall, we expect the IT sector to perform at least in line with market in 2025. Improving growth should attract investor interest away from some other sectors, where the demand outlook is deteriorating but valuations are high," the broking firm said in its report. HSBC Securities has upgraded Infosys and LTIMindtree to 'buy' from 'hold', and Wipro to 'hold' from 'reduce'. These three stocks closed in the green. On the other hand, the broking firm reduced its rating on Tata Consultancy Services and Tech Mahindra.

Shares of textile-related companies skyrocketed on expectations that the current political unrest in Bangladesh would lead to a shift in demand to India. Reports said that the Bangladesh government is planning to sell 32 loss-making garment companies under the Beximco Group, which runs a total of 169 companies. Bangladesh is the world's second-largest apparel exporter in the world. Trident and Vardhman Textiles were among the top performers from the sector. They closed higher by 10.2% and 4.3%, respectively.

Among specific stocks, CE Info Systems closed 16% higher after the company reversed its decision to make any investment in the proposed new company of its Chief Executive Officer Rohan Verma.

* Of the Nifty 50 stocks, 21 rose and 29 fell

* Of the Sensex stocks, 14 rose and 16 fell

* On the NSE, 1,540 stocks rose, 1,313 fell, and 78 were unchanged

* On the BSE, 2,296 stocks rose, 1,774 fell, and 170 were unchanged

* Nifty FMCG: down 2.2%; Nifty Auto: down 0.8%; Nifty IT: up 0.3%

BSE                                               NSE

Sensex: 81508.46, down 200.66 points or 0.25%     Nifty 50: 24619.00, down 58.80 points or 0.24%

End

Edited by Ashish Shirke

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