A close below 5,860 may start a short downtrend on the Nifty
The market closed in the positive, but off the day’s high, on support from consumer durables and fast moving consumer goods after FMCG leader Hindustan Unilever’s results beat market expectations. A close below 5,860 may start a short downtrend on the Nifty. The National Stock Exchange (NSE) reported a volume of 52.39 crore shares and advance-decline of 747:564.
The Indian market opened with gains as investors were lured into buying banking, realty and metal stocks after the sectors were down last week. However, cautiousness prevailed ahead of the Reserve Bank of India’s (RBI) annual policy announcement later this week. Meanwhile, the Asian markets were higher in morning trade on hopes that central banks across the region will provide fresh stimulus to boost growth.
The Nifty opened seven points higher at 5,878 and the Sensex started the week at 19,307, a gain of 20 points over its previous close. Gains in power, PSU, realty, metals and capital goods sectors led the market higher in early trade.
But profit booking at the highs soon saw the benchmarks paring their early gains and edging lower as trade progressed. Meanwhile, the ruling UPA government managed to persuade the opposition to allow the passage of Finance Bill, which is expected to take place on Tuesday. However, the Parliament, which began the second half of the Budget Session on 22nd April, did not see a full session so far.
The benchmarks fell to their lows in noon trade as selling intensified. At the lows, the Nifty was down to 5,869 and the Sensex slipped to 19,284. A positive opening of the key European markets boosted sentiments among domestic investors, which helped the market to recover from their lows.
Gains in the BSE Fast Moving Consumer Goods index, after Hindustan Unilever delivered better-than-expected quarterly results, led the market to its intraday high in late trade. Other sectoral gainers were consumer durables, realty and power. The Nifty touched 5.919 and the Sensex climbed to 19,429 at their highs.
The market retreat from its highs but closed in the positive. The Nifty settled 33 points (0.56%) higher at 5,904 and the Sensex finished the session at 19,388, a gain of 101 points (0.52%) over its previous close.
Among the broader indices, the BSE Mid-cap index gained 0.68% and the BSE Small-cap index rose 0.27%.
With the exception of BSE Metal (down 0.79%) and BSE Healthcare (down 0.08%), all other sectoral gauges settled higher. They were led by BSE Consumer Durables (up 2.43%); BSE FMCG (up 2.30%); BSE Realty (up 1.53%); BSE Power (up 1.44%) and BSE TECk (up 1.04%).
Nineteen of the 30 stocks on the Sensex closed in the positive. The chief gainers were Hindustan Unilever (up 6.98%); Wipro (up 3.57%); Hero MotoCorp (up 3.24%); Sterlite Industries (up 2.29%) and ITC (up 1.69%). The top losers were Jindal Steel & Power (down 4.24%); Coal India (down 1.74%); Sun Pharmaceutical Industries (down 1.50%); HDFC (down 0.99%) and Tata Steel (down 0.80%).
The top two A Group gainers on the BSE were—Coromandel International (up 8.30%) and Reliance Communications (up 7.79%).
The top two A Group losers on the BSE were—Indian Overseas Bank (down 5.07%) and JSPL (down 4.24%).
The top two B Group gainers on the BSE were—Waterbase (up 20%) and Winsome Yarns (up 19.43%).
The top two B Group losers on the BSE were—Kanishk Steel Industries (down 19.98%) and Riga Sugar Company (down 19.95%).
Of the 50 stocks on the Nifty, 29 ended in the green. The key gainers were HUL (up 7.11%); Reliance Infrastructure (up 4.35%); IndusInd Bank (up 3.68%); Jaiprakash Associates (up 3%) and Hero MotoCorp (up 2.70%). The main losers were JSPL (down 3.95%); NMDC (down 2.33%); Coal India (down 1.93%); Sun Pharma (down 1.63%) and State Bank of India (down 1.04%).
Markets in Asia closed mostly higher on hopes that central banks will initiate fresh measures to boost growth. The US Federal Reserve is holding its two-day meeting starting tomorrow, the ECB will is holding a meeting on 2nd May and India’s RBI will unveil its annual monetary policy on 3rd May. However, trading was thin as the Chinese and Japanese markets are closed for local holidays.
The Hang Seng rose 0.15%; the Jakarta Composite gained 0.43%; the Straits Times advanced 0.395and the Taiwan Weighted added 0.10%. On the other hand, the KLSE Composite fell 0.19% and the Seoul Composite settled 0.20% lower.
At the time of writing, the CAC 40 of France was 0.71% higher, DAX of Germany gained 0.38% and UK’s FTSE 100 was flat with a positive bias. At the same time, the US stock futures were trading with minor gains.
Back home, foreign institutional investors were net buyers of stocks totalling Rs224.75 crore on Friday while domestic institutional investors were net sellers of equities aggregating Rs377.78 crore.
Non-banking financial company Bajaj Finserv Lending will now offer loan against securities on its online platform. According to the company, an applicant with a current securities portfolio of minimum Rs45 lakh will be eligible to apply and depending on the quality of portfolio, the eligibility will be processed. The stock declined 0.73% to Rs756 on the NSE.
GMR Infrastructure has said that GMR Bajoli Holi Hydropower Pvt Ltd, a step-down subsidiary of the company, has achieved financial tie-up with IDBI Bank, L&T Infrastructure Finance Company and L&T Finance. The company informed the exchanges that GMR Bajoli is developing a 180-MW run-of-river hydro electric power project on river Ravi at Chamba district in Himachal Pradesh. GMR Infra was down 0.94% to Rs21.10 on the NSE.
But can they win against the fundamentals?
The medium-term bullishness I had expected in...
The fast moving consumer goods company has delivered another robust quarter, despite a difficult economy, driven by strong showing in both home and personal care as well as domestic consumer divisions
Hindustan Unilever, one of India’s leading fast moving consumer goods (FMCG) company, has come out with very positive results, despite intense competition, a benign economy and uncertainty over inflation. The company has reported 12% year-on-year (y-o-y) increase in net sales to Rs6465.81 crore for the quarter ended 31 March 2013. Likewise, its net profit is up 14.65% y-o-y, and touched Rs787.20 crore for the March 2013 quarter. This was driven by strong performances in domestic consumer business as well as home and personal care divisions. During the quarter, the domestic consumer business grew 13% with strong 6% underlying volume growth. Both home and personal care (HPC) and foods & beverages (F&B) registered double digit growth.
Earlier this year, we had recommended the stock at Rs473.95 (please refer to our Long Term section of the Moneylife magazine). Currently, at time of writing the piece, the stock is quoting at Rs498.50 on the Bombay Stock Exchange (BSE).
Analysis of Moneylife database on Hindustan Unilever reveals that the company has been one steady performer through thick and thin. Its net sales growth rate is equal to its three-quarter y-o-y growth rate of 12%. However, it is its operating profit that stood out, growing 17% y-o-y, beating its average three-quarter y-o-y growth rate of 15%. Such is the quality of cost control. Its return on networth and return on capital were extraordinary high at 108% and 123% respectively, which means the company is also commanding premium valuations. Its market capitalisation stood at over 25 times operating profit.
Exceptional items during the March 2013 quarter included reduction in provision for retirement benefits of Rs10.39 crore and restructuring costs of Rs98 lakh. Also, during the March 2013 quarter, the company had entered into a share purchase agreement with promoters of M/s Aquagel Chemicals Pvt Ltd for acquisition of 74% of the equity share capital of ACPL. The company was earlier holding an investment of 26% of its equity share capital. Therefore, Aquagel has become a wholly-owned subsidiary with effect from 1 April 2013.
While commodity costs were relatively benign during the quarter, competitive intensity remained at high levels. They continue to push brands vis-à-vis advertising & promotion, which is up Rs144 crore (+90 bps) in the quarter.
Other divisions too performed well, too. Soaps & detergents witnessed broad-based growth and grew 13%. Personal products grew 12%, driven by acceleration of its hair & oral care segments. Beverages saw robust growth across portfolio, and grew 18%. Packaged foods grew 7%. Surprisingly, its ice cream division did not perform well due to “slowdown in the market”.
Harish Manwani, chairman HUL, commented: “In a challenging environment, we have delivered broad based competitive growth and margin improvement. We have continued to invest in strengthening our brands, stepped up innovation and driven in-market execution and operational efficiencies even harder. At the same time, we are making good progress on our Sustainable Living Plan agenda. While there are near term concerns around slowing market growth and inflationary pressures on consumers, we are confident of the medium to long term growth prospects of the FMCG sector and remain focused on delivering consistent and competitive growth with sustainable operating margin improvement.”
The board of directors has proposed a final dividend of Rs6 per share for the financial year ending 31 March, 2013, subject to the approval of the shareholders at the annual general meeting. Together with interim dividend of Rs4.50 per share and special dividend of Rs8 per share, the total dividend for the financial year ending 31 March, 2013 amounts to Rs18.50 per share.
For more information on other companies’ results, check here