Sensex, Nifty continue to be in an uptrend: Friday closing report

As long as the Nifty stays above 6,030, it may move higher

On Thursday, we had mentioned that the Nifty has to keep itself above 6,000, for the upmove to continue. Today, for the entire session the benchmark kept itself above this level and closed in the green for the third consecutive session on Friday. Today except for a few minutes trading in the red, both the benchmarks managed to stay well above Thursday’s close. The positive momentum existed on the back of fall in the jobless claims in the US.


The BSE 30-share Sensex opened at 20,441 and moved between 20,282 and 20,451 and before closing at 20,377 (up 66 points or 0.32%) while the NSE Nifty opened at 6,078 and traded between 6,031 and 6,080 before closing at 6,063 (up 27 points or 0.45%). The NSE recorded a volume of 54.66 crore shares.


The Indian economy is expected to grow 4.9% in FY14, marginally lower than the Finance Ministry's estimate of a 5% growth, a government statement said on Friday. The GDP grew 4.6% annually in the first half of the current fiscal year, down from 5.3% in the corresponding period a year ago. Growth slowed in almost all sectors, including services such as tourism, transport and telecoms.


Row over Telangana statehood and the harassment of Tamil fishermen by Sri Lankan Navy rocked Parliament for the third day today, turning the first week of the extended Winter Session into a complete washout.


US indices closed Thursday in the green. Initial jobless claims dropped for the first time in three weeks, falling 20,000 to 331,000 in the period ended February 1, according to the Labor Department. The monthly US jobs data will be released today.


All the Asian indices closed in the green. Nikkei 225 was the top gainer which rose 2.17%.


China's services sector grew at its slowest pace in almost 2-1/2 years in January. The HSBC/Markit Services Purchasing Managers' Index (PMI) retreated to 50.7 in January, a low last seen in August 2011 though still above the 50-point level that demarcates growth and contraction. December's PMI was 50.9.


European indices were trading in the green while US Futures were trading marginally higher.


In Europe, the European Central Bank kept interest rates unchanged on Thursday. The Bank of England kept its benchmark rate at a record-low 0.5%, while its bond-purchase plan stayed at 375 billion pounds ($611 billion) on Thursday.


UK factories increased production by less than forecast in December, suggesting manufacturing is set for steady rather than runaway growth this year. Output rose 0.3% from November, the Office for National Statistics said today in London. Industrial output rose 0.5% in the final three months of the year. Manufacturing grew 0.7% in the fourth quarter.


Urban consumption to remain subdued over next 6-12 months, says study

According to a survey conducted by Religare, travel, jewellery, luxury good and FMCG spends across urban India are weakening while home and car purchases are being deferred by consumers

Discretionary travel, jewellery, luxury goods and fast moving consumer goods (FMCG) spending among urban Indians is weakening. While gold is losing its lustre, home and car purchases are being deferred by urban consumers and this downtrend may continue over the next six to 12 months says a study.


Religare Capital Markets Ltd, in its "The 5th Urban Consumer Survey" found a marked decline in consumer confidence, especially in larger cities. "We expect consumption trends to remain subdued over the next 6-12 months, with H2FY14 growth rates likely to moderate given the high festive demand base of last year and comparatively early festive season in FY14. As such, we maintain our negative stance on the sector in view of the soft demand trends and fairly rich valuations," it said in the study.


The study was conducted across 100 plus towns and cities and over 1,000 people participated in the survey.


Here are the survey results...


Discretionary spend outlook muted:

Only 33% of respondents are more confident about economic and own growth prospects, down from 40%/51% in our November 2012/May 2012 surveys. Moreover, those in higher income households (HH) and metros are less upbeat than persons in lower income HH and tier-3 cities. Food inflation, although moderating now, has been hurting discretionary spends. In FMCG, we are seeing downgrading to cheaper products in select categories such as hair oil, toothpaste and health drinks, albeit not as evident as in our November 2012 survey, Religare said.


FMCG –what’s on the shopping list?

FMCG spends have moderated but key brand preferences stand out. In soaps, Dettol, Lux and Dove continue to dominate the market (16%, 15%, 15% market share, respectively based on respondent preferences), while P&G’s Head & Shoulders (H&S) is the most preferred shampoo brand. Notably, Dove, L’Oreal and H&S are doing well among higher income HH (Dove gaining strongly).

Overall, Hindustan Unilever (HUL) maintains its strong lead in home & personal care (HPC) with a steady 53% market share in soaps (unchanged from our November 2012 survey) and 43% share in shampoo (vs 40% last survey, widening its lead over P&G to 1,000 bps with the latter shedding 200bps to 33%).

In skin cream, HUL has about 50% share (Nivea, the biggest gainer at over 400bps to 17%) and in detergents, 62% (Surf dominates high income HH).


Colgate continues to lead in toothpaste with 47% market share (45% last survey) while HUL has lost 700bps from our last poll to35% now.


Asian Paints remains the most preferred brand in the paints category with a stable 54% share, while Berger has lost 200bps to 10%.


In footwear, BATA has improved its share to 27% (25%).

Homes and Cars –highly aspirational:

About 18% and 22% of consumers polled are looking to buy homes and cars, respectively over the next three to six months, though purchase decisions hinge on the economic outlook. Property and fuel prices are the key variables affecting purchase plans rather than interest rates.

Maruti is the most preferred auto brand with 48% market share (40% previously), followed by Hyundai at 23% (29%) and Tata Motors.



No decision on limiting free ATM transaction yet

Namo Narain Meena clarified in Lok Sabha that although RBI received a proposal from IBA to limit free transaction on ATMs, no decision has been taken so far

The Reserve Bank of India (RBI) is yet to take a decision on limiting the number of free transactions at ATMs, as proposed by Indian Banks' Association (IBA), Parliament was informed on Friday.


In a written reply to the Lok Sabha minister of state for finance Namo Narain Meena said, "The RBI has received a proposal from IBA to limit free transaction on ATMs and also to increase the ATM charges. No decision on the proposal has been taken".


In November 2013, the government advised banks to review the existing security arrangements at their ATMs in terms of instructions issued by RBI on security measures in branches and ATMs, the minister said in a separate reply.


To improve asset quality of banks and reduced non-performing assets (NPAs), Meena said, the government has also advised public sector banks (PSBs) to take a number of new initiatives to increase the pace of recovery.


It includes appointment of nodal officers for recovery, to conduct special drives for recovery of loss assets and to constitute a board level committee for monitoring of recovery.


To ensure effective and expeditious recovery of defaulted loans of banks and financial institutions, the Enforcement of Security interest and Recovery of Debt Laws (Amendment) Act 2012 has been enacted, he said.


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