Sensex, Nifty50 end lower dragged by FMCG, metal & pharma; HUL top loser on royalty hike shock

• India’s benchmark indices Sensex and Nifty50 closed down 0.39% and 0.44% respectively.
• On the Nifty50 index, HUL was the top loser with a decline of nearly 4%.
• The entire FMCG pack was among losers on Friday with the Nifty FMCG index closing down 0.96%.

India’s benchmark indices Sensex and Nifty50 closed lower on Friday dragged down by the FMCG, metal, pharma and realty sectors, as concerns of a global economic slowdown continued to weigh on sentiments.

The Sensex closed 0.39%, or 237 points, lower at 60,621 while the Nifty50 ended 0.44%, or 80 points, lower at 18,027. On Thursday, the two benchmark indices had ended 0.3% lower following weak US consumer data.

"Shaking off the weak lead from Wall Street, domestic indices attempted to trade higher due to economic optimism that stemmed from China’s reopening. However, concerns over the global economic slowdown eventually caught up and dragged markets lower. All sectors bled, barring banking stocks, ahead of the release of key earnings by private banking majors," said Vinod Nair, head of research at Geojit Financial Services.

Top gainers and losers on the Nifty500:
Source: NSE, as of 3:30 p.m., January 20, 2023

On the Nifty50 index, HUL was the top loser with a decline of nearly 4% as the company’s announcement of an increase in royalty payout to parent Unilever shocked investors. However, analysts are not too concerned.

“On the effective 80 basis point increase in royalty (effective for the next five years) from 2.65% to 3.45%, we are not particularly perturbed if HUL receives commensurate benefits from the parent,” said a report by Motilal Oswal.

On Thursday, India’s largest FMCG player HUL reported a volume growth of 5% in Q3, in line with analyst expectations. Despite this, the company said the topline and bottomline growth during the quarter was price-led, not volume-led.

However, it noted that there are signs of rural slowdown “bottoming out”, which should be a positive sign for India’s FMCG sector.

The entire FMCG pack was among losers on Friday with the Nifty FMCG index closing down 0.96%.

The Rupee appreciated 18 paise to close at 81.18 against the US dollar on Friday while Brent crude oil price gained 0.56% at $86.64 per barrel.

Stocks in Asia gained on Friday on hopes of recovery in China after it reopened and lifted stringent Covid-19 rules ahead of the Lunar New Year holidays.

Hang Seng surged 1.82%, Shanghai SE Composite Index rose 0.76%, Nikkei 225 went up 0.56% while Taiwan TSEC 50 Index gained 0.04%.

Domestic institutional investors (DIIs) bought ₹1,509 crore worth of equities on Friday while foreign institutional investors (FIIs) sold ₹2,002 crore.

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