Sensex Opens Marginally Lower; Nestle Falls 5% Post Q3 Results

Wed, 17 Feb 09:30 am | Yash Vora, TM Team

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Asian share markets are trading on a negative note today as investors juggle the prospects for an economic comeback and additional stimulus with continued pandemic concerns.

The Nikkei is trading lower by 0.9% while the Hang Seng is trading up by 0.1%.

US stock markets ended mixed overnight. The Dow Jones Industrial Average notched a record closing high, climbing 0.2%, on the prospect of more fiscal aid. Meanwhile, the Nasdaq dropped 0.3% amid concerns over rising interest rates.

Back home, Indian share markets have opened on a negative note, amid weak signals from Asian markets and mixed closing for US stocks overnight.

The BSE Sensex is trading down by 219 points. Meanwhile, the NSE Nifty is trading lower by 46 points.

Bajaj Auto is among the top gainers today. Nestle, on the other hand, is among the top losers today.

The BSE Mid Cap index has opened up by 0.1%. The BSE Small Cap index is trading higher by 0.2%.

Sectoral indices are trading on a mixed note with stocks in the energy sector witnessing buying interest.

Banking stocks, finance stocks and metal stocks, on the other hand, are trading in red.

Shares of Adani Transmission and Adani Gas hit their 52-week highs today.

The rupee is trading at 72.94 against the US$.

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Gold prices are trading down by 0.3% at Rs 46,766 per 10 grams. Meanwhile, silver prices are trading up by 0.2% at Rs 69,532 per kg.

The world's largest cryptocurrency Bitcoin jumped as much as 5% to US$ 50,548, rising above US$ 50,000 for the first time on Tuesday.

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In news from the FMCG sector, Nestle India is among the top buzzing stocks today.

Nestle India on Tuesday reported a 2.3% year-on-year (YoY) rise in its net profit for the quarter ended December to Rs 4.8 billion.

The company's revenues in the quarter grew 9% on a YoY basis to Rs 34.3 billion. Volume-led domestic sales growth and improved out-of-home consumption helped the country's largest packaged foods company report 9% increase in revenues.

Domestic sales growth is broad based largely driven by volume and product mix. Demand in out-of-home channel further improved in the quarter but continues to be impacted by Covid-19, the company said in its earnings statement.

The company's total expenses in the quarter rose 8.3% YoY to Rs 27.9 billion, which was largely because of a 11.3% jump in other expenses of the company.

Sales through e-commerce channels more than doubled last year and now contribute 3.7% to Nestle India's total domestic sales, the packaged foods maker said.

The maker of Maggi noodles and Nescafe coffee said about 75% of its products grew double-digit last year, riding on strong in-home consumption.

For the full year ended December 31, 2020, Nestle which follows a calendar year, reported 8% growth in revenues to Rs 132.9 billion, and net profit increase of 6% to Rs 20.8 billion.

The company's board also approved a final dividend for the financial year ended December 31 of Rs 65 per share.

Nestle share price has opened the day down by 4.7%.

Speaking of the FMCG sector, have a look at the chart below which shows the performance of BSE Sensex and BSE FMCG index since 2009:

While the Sensex has offered 393% returns since 2009, the BSE FMCG index has gone up a staggering 532% returns over the same period.

Richa Agarwal, lead Smallcap Analyst at Equitymaster, believes this outperformance could continue for many years.

With a rising population and standards of living, Indian's consumption demand for FMCG products will skyrocket over the coming years.

Moving on, Tata Group stocks are in focus today.

As per a leading financial daily, Indian conglomerate Tata group will buy 68% stake in online grocery startup BigBasket for Rs 91-92 billion. As per reports, the deal was finalised this month.

The transaction, which is a mix of a primary and secondary sale of shares, will provide a full exit to two of BigBasket's biggest investors, Chinese e-commerce giant Alibaba and scandal-hit private equity firm Abraaj Group.

While Alibaba Group holds a 27.6% stake in the company, Abraaj owns about 18.1%. Acquiring the stakes of just these two investors will give Tata Group close to the majority stake it's seeking in BigBasket.

Tata group is waiting for the Competition Commission of India's (CCI) approval to the deal.

Reports state that this transaction is seen as one of the largest mergers and acquisitions (M&A) deals in the digital economy. BigBasket's last-round valuation was US$ 1.2 billion.

The Tata Group will hold the right of first refusal on any such stake sale by other investors.

BigBasket CEO Hari Menon said recently that an IPO would help investors exit.

Tata Group is also close to finalising a secondary transaction of US$ 200-250 million to acquire a 55% stake in online pharmacy 1mg.

How the above developments pan out remains to be seen. Meanwhile we will keep you updated on the latest developments from this space.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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