FMCG Stocks Outlook for the wee – 07 to 11.09.2015

FMCG Stocks Outlook for the wee – 07 to 11.09.2015

   ( www.rupeedesk.in )

Stocks of fast moving consumer goods companies are seen trading range-bound next week but the bias remains negative given the weak broader market sentiment due to global macroeconomic concerns.

Though defensive sectors like information technology, pharmaceuticals and FMCG are likely to

perform better than broader markets, FMCG is less preferred among defensives. There could be

some technical rebound after the recent declines but upside is unlikely to sustain.

This week, CNX FMCG Index fell 2.5%, while Nifty and Sensex plunged 4%. Among the key

FMCG stock of ITC to perform well as its current valuations are favourable.

We are expecting positive on Godrej Consumer Products in the medium to long term due to good

sales volume growth as the volume growth trajectory to continue outpacing peers' given the

company's strong category presence and robust new product pipeline. The stock given its

improving revenue growth and margin outlook.

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.