Business Standard ·
Economy, business and finance
ITC leads as Nifty FMCG gains 2%; festive season puts sector in focus
In the Nifty FMCG basket 13 stocks advanced while only 2 declined. Intraday, the FMCG index was up 1.82 per cent to 45,645.20.
Shares of fast-moving consumer goods (FMCG) companies snapped a four-day losing streak to gain over 1 per cent on Wednesday with most frontline stocks Hindustan Unilever (HUL), ITC, Dabur India, Emami, Godrej Consumer Products and Procter & Gamble Hygiene and Health Care gaining in the range of 2 to 4 per cent.
In the Nifty FMCG basket 13 stocks advanced while only 2 declined. At 11:47 AM, the index was up 1.68 per cent at 45,583.90, compared to a 0.46 per cent gain in the Nifty 50. In intraday trading, the FMCG index was up 1.82 per cent to 45,645.20.
Sunny Agrawal, deputy vice president, fundamental research, SBI Securities noted that the positive reaction to the Nifty FMCG index or FMCG companies today is due to current uncertain environment, “money is rotating out of riskier sectors and shifting to defensives like FMCG,” he said.
Agrawal also attributed the surge to the onsent of the festive season that has begun with Ganesh Chaturthi. “Usually, the festive season extends till Diwali and Christmas in the month of December. So, it is expected that the September quarter and December quarter should be relatively better in terms of the demand environment, and that is something that should support FMCG as a sector.” The Nifty FMCG index snapped a four-session losing streak on Wednesday after falling 1.06 per cent over the previous four sessions. The index gained 1.82 per cent in intraday trade.
Vipin Kumar, AVP research at Globe Capital Market noted that the Nifty FMCG index is exhibiting a lower-high and lower-low structure, trading below its key short-term as well as long-term moving averages. “Elevated crude oil prices have a direct negative impact on inflation, which presents a significant headwind for the FMCG industry. Considering the current chart structure, the possibility of a bounce-back or relief rally cannot be ruled out at this juncture; however, any recovery up to the 47,500–48,000 spot levels is likely to attract selling interest,” he said.