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Informist, Friday, Aug 23, 2024

MUMBAI – Shares of fast-moving consumer goods companies are likely to rise slightly next week, analysts said. Most FMCG stocks ended higher this week owing to expectation of higher sales in the upcoming months due to the festival season, analysts said. The Nifty FMCG index extended gains for the third straight week, even though it ended the day slightly lower. 

"The Nifty FMCG index is trading in higher highs and higher lows formation and is well-placed on multiple chart frames. It has witnessed a bullish breakout on daily charts on Wednesday," said Vipin Kumar, senior technical and derivatives analyst at Globe Capital Market. Going ahead, the analyst expects the index to test 65000 points in the immediate near term, and the support is placed around 62600–62500. Today, the Nifty FMCG index ended 0.1% lower at 63409.25 points. 

FMCG companies have experienced a sequential improvement in demand, with signs of revival in the rural market due to price cuts and enhanced consumer offerings, Motilal Oswal said in a report today. Management of the majority of these companies anticipates implementing price increases in the second half of 2024-25 (Apr-Mar) to offset rising raw material costs and drive revenue growth, the brokerage added. 

"Management commentaries project better revenue, aided by rural demand recovering, distribution expanding and pricing growth returning in H2 (Oct-Mar)," said Anand Rathi Shares and Stock Brokers in a report on Wednesday. The brokerage also expects price hikes to offset high input costs, which should aid 2024-25 gross margins. Even though FMCG stocks have gained 20-25% in the last four months, the brokerage expects healthy returns in the mid- to long-term owing to a better demand outlook and the government's focus on the rural/social sectors. 

"Factors like higher government spending, a favourable monsoon, and an upcoming strong festive season are expected to further drive rural demand in the coming quarters. However, the increasing competitive intensity from smaller and regional players requires careful monitoring," Axis Securities said in a report this week. As per the brokerage, higher advertising spending to regain market share has either slowed or may temporarily slow their margin expansion. However, these investments are expected to yield benefits over the long term, the brokerage said. 

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Following are the resistance and support levels for the stocks for next week as per calculations by Informist based on their prices on the National Stock Exchange:

End

Reported by Noel John

Edited by Akul Nishant Akhoury

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