FMCG Stocks Outlook for the week – 24 to 28.08.2015
Firm
as defensives preferred in likely weak market
( www.rupeedesk.in )
Stocks
of fast moving consumer goods companies are seen trading with a positive bias
next week as defensive sectors may get preference amid a likely weak overall
market sentiment. While major share indices fell this week on concerns over
slowing Chinese economy, defensive sectors like pharmaceuticals, FMCG and
information technology have performed well and this trend is expected to
continue in the coming week too. The CNX FMCG index rose 1.8% this week.
However, FMCG stocks would be relatively less preferred when compared to pharma
and IT among the defensive stocks.
Expiry
of the derivatives contract next week may lead to some volatility in the market
and hence any one-side movement in stocks is unlikely. Dabur India and ITC
would be the top picks in the sector for the near term. On the whole,
fundamentals for the FMCG sector are mixed. While benign raw materials are aiding
gross margins of companies, increased competitive intensity may lead to higher spend
on advertising and promotions.
Also,
demand on the ground has not picked up much and monsoon has been weak so far
this season, which is a negative. Monsoon rainfall in India so far this season
that began on Jun 1 has been 9% below normal at 580.5 mm, according to the
latest data from the India Meteorological Department.
Encouraging
consumer demand through promotional activities and launch of niche, relevant
and
innovative
products will be the key theme for all companies going forward. Companies are
giving promotional offers of biscuits, packaged foods, fruit juices, and soaps
and detergents.