Monsoon dependent stocks slip on IMD forecast

Shares of FMCG stocks and shares of two-wheeler and tractor maker M&M slipped across the bourses on IMD forecast

Shares of Fast-moving consumer goods (FMCG) and fertilizer stocks and shares of two-wheeler and tractor maker M&M slipped across the bourses after India Meteorological Department (IMD) downgraded its earlier April estimate from 93% to 88% long period average (LPA)  inciting concern of weak agricultural output that could further push up the inflation.

Meanwhile, the Reserve Bank lowered the DGP estimate for the current fiscal to 7.6% from 7.8% forecasted in April, referring to risks such as sub-normal monsoon and firming crude oil prices.

Sectors related to agriculture such as fertilizers, tractors and those dependent on rural income like FMCG and two-wheelers are trading lower.

Among the FMCG pack, ITC, HUL, Marico, Colgate-Palmolive, Britannia, Dabur India, Nestle India are trading lower between 1-10% on the BSE.

Cigarette maker ITC is extending its losses for the second day after Maharashtra banned the sale of loose cigarettes. Also, the stock turns ex-dividend today for dividend of Rs 6.25 per share for the year ended 31 March 2015.

Shares of Nestle have dropped 10% on the BSE after the Delhi government summoned officials of Nestle India claiming that the samples of Maggi noodles fail to meet food safety norms and are unsafe.

In the auto segment, shares of two wheeler companies including Hero Motocorp, Bajaj Auto and tractor major M&M are trading lower by 1% each on deficient monsoon forecast. The slowdown in the rural economy will result in a fall in motorcycle and tractor volumes citing low spending capacity of the customers.

Tracking the recent downgrade by the IMD, the demand for fertilizers will drastically decrease. In the fertilizer space, Rashtriya Chemicals and Fertilizers (RCF), National Fertilizers and Gujarat State Fertilizers and Chemicals (GSFC), Chambal Fertilisers and Chemicals, Khaitan Chemicals are trading lower up to 10% on the BSE.