Consumer firms drag Indian shares lower

Dec 9 (Reuters) – Indian shares inched lower on Monday, coming out of their best week in six months, dragged down by consumer stocks’ losses after Godrej Consumer Products’ bleak third-quarter forecast.

The NSE Nifty 50 (.NSEI),  fell 0.24% to 24,617.9 points as of 10:26 a.m. IST, while the BSE Sensex (.BSESN),  shed 0.21% to 81,542.95.

Both the indexes had gained about 2.3% last week, their best since early June, as the Reserve Bank of India (RBI) cut the cash reserve ratio that banks are required to hold, effectively easing monetary conditions.

While the outlook for domestic equities remains positive, markets may only see incremental moves in the next few sessions ahead of the U.S. and domestic inflation readings this week, two traders said.

“The RBI’s measures to ease liquidity in its policy decision on Friday and some buying by foreign investors last week come as a welcome relief. However, challenges remain for domestic equities, especially on economic and corporate earnings growth,” Krishna Appala, senior research analyst at Capitalmind Research, said.

Meanwhile, consumer stocks (.NIFTYFMCG), lost 2.2%, dragged down by a 10.2% drop in Godrej Consumer Products (GOCP.NS), after the Cinthol soap maker warned of weak sales and margin in the current quarter.

The sub-indexes all 15 stocks declined. Hindustan Unilever (HLL.NS), Tata Consumer (TACN.NS), Nestle India (NEST.NS), Britannia (BRIT.NS), and Trent (TREN.NS),  were the top five Nifty 50 losers.

Eight of the 13 major sectors also logged losses. The broader, more domestically-focused small-caps (.NIFSMCP100),  and mid-caps (.NIFMDCP100), rose 0.2% and 0.4%, respectively.

Among individual stocks, Star Health (STAU.NS),shed 3.2% after getting a show-cause notice from the country’s insurance regulator for non-compliance with various regulations and guidelines.

Bucking the trend, tyre maker Ceat (CEAT.NS), jumped 8% on plans to buy French company Michelin’s Camso brand for $225 million.

Construction and engineering firm Larsen and Toubro (LART.NS),  gained 2% after a favorable order from a tribunal set aside a demand of 7.02 billion rupees ($83 million).