FMCG Stocks Outlook
for the week – 27.06.2016 to 01.07.2016, Improved monsoon rains to lift
sentiment
Shares of fast moving consumer goods companies are seen
trading on a positive note next week, as
the broader market is likely to rebound after the sharp fall
witnessed today on UK's decision to exit
the European Union. Pick up in monsoon rains in last few
days is also likely to lift sentiment in FMCG.
The impact of 'Brexit' on Indian FMCG companies is seen
limited. The progress of monsoon is the key factor that will determine the trend in FMCG stocks. After a
sputtering start, the southwest monsoon seems to have finally picked up. In the week ended Jun 22,
India received 39.5 mm rainfall, 7% below normal. Rains were 29% below normal in the week
earlier.
Hopes are pinned on good monsoon this year for revival in
demand and keeping inflation under
check. Progress of rains has a bearing on FMCG sector, as
rural demand for consumer goods is
dependent on performance of monsoon. This week's exit was
with "Brexit' and next week will be
driven by volatility due to expiry of June derivatives
contracts on Thursday.