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Consumer stocks lead Indian shares higher amid festival demand

ITC, Hindustan Unilever advance

MUMBAI (NewsRise) -- Indian shares edged higher on Monday, led by gains in consumer companies amid hopes of higher demand during the ongoing festival season.

The benchmark BSE Sensex added 0.1%, or 32.67 points, to 31,846.89, while the broader Nifty 50 ended up 0.1%, or 9.05 points, at 9,988.75. Index heavyweight ITC gained 0.7%, while rival Hindustan Unilever added 1.2%.

"Markets are driven by consumer companies on the back of festive season demand," said Akash Jain, vice president, equity research, Ajcon Global Services. "Consumer goods and automobile sectors are likely to strengthen going ahead."

Demand for consumer durables and cars tend to pick up during the Hindu festival of Diwali, as purchases during this time are considered auspicious. Passenger vehicle sales in India climbed 11% from the year earlier in September as auto makers dispatched more vehicles to dealerships to boost inventory ahead of Diwali, data issued by the Society of Indian Automobile Manufacturers showed Monday.

Tata Motors gained 0.4% to 425.90 rupees. Nomura rated the stock as 'Buy' with a target price of 514 rupees. India's top carmaker Maruti Suzuki India slipped 0.2%.

Still, for Indian markets "there is a possibility we could see a correction if second-quarter earnings are below expectations," Ajcon Global's Jain said.

Indian companies are due to report earnings for the second quarter ended Sept. 30 later this month.

Trading in the rest of the region was mixed after U.S. indexes snapped a six-day record run on Friday. The Nikkei Asia300 Index edged 0.1% lower, even as Chinese shares advanced as markets opened after a weeklong holiday.

In Mumbai on Monday, 16 of the 30 Sensex constituents ended higher, while overall advancing issues beat declining ones 1,520 to 1,187 and 148 remained unchanged.

Godrej Consumer Products gained 3.2% to 978.10 rupees. Nomura upgraded the stock to 'Neutral' from 'Reduce' and raised its target price to 990 rupees from 945 rupees, citing fair valuations.

Titan Co. gained 3.5%. CLSA said the government move to defer applicability of Prevention of Money Laundering Act for the jewelry sector is a well-timed decision just ahead of festive season. "This comes as a relief to the industry as well as Titan due to increased compliance costs, customer reluctance to share detail about the impact on sales and fear of an increase in laundering," CLSA analysts said in a note.

Sun Pharmaceutical Industries lost 0.1%. The stock gained 5.4% for the previous week. Dr. Reddy's Laboratories added 1.3%.

Oil and Natural Gas Corporation fell 1.6% after global crude oil prices tumbled 3% on Friday. Reliance Industries shed 0.7%.

Water pump maker Kirloskar Brothers gained 10.3% after the Government reduced tax rate on pump parts to 18% from 25%.

Reliance General Insurance Co., the non-life insurance arm of Reliance Capital, filed its draft papers today with the Securities Exchange Board of India seeking permission for its Initial Public Offering. The IPO comprises fresh issue of about 16.7 million shares by Reliance General Insurance and 50.3 million shares of Reliance Capital. Reliance Capital ended up 2.8%.

--Nivedita Naidu

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