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Informist, Friday, Sep 6, 2024

MUMBAI – Shares of fast-moving consumer goods companies are expected to consolidate in the coming week due to expensive valuations, analysts said. Since the overall market trend is expected to remain negative next week, investors might also park some money in these stocks as these are a "good place to hide," Vinit Bolinjkar, head of research at Ventura Securities, said. 

Even though FMCG stocks might see some buying owing to their defensive nature next week, the Nifty FMCG index will likely stay in a range between 62500 points and 64000 points, Shiju Koothupalakkal, technical and derivatives analyst at Prabhudas Lilladher, said. The Nifty FMCG index ended the week lower, extending losses for the second straight week. The Nifty FMCG index ended 0.8% lower at 63175.70 points. 

While shares of FMCG companies saw some gains early in the week, they fell near to the end owing to profit booking. Shares of FMCG companies were also negatively affected by reports that these companies, led by processed foods manufacturers, may raise prices by 2-5% in the coming months due to an increase in costs of raw materials. Prices of cocoa, used to make chocolates, are up around 108% on year, while prices of wheat are up nearly 10% on year, and barley prices have increased nearly 14% from a year ago, The Financial Express reported Thursday.

Going forward, analysts expect sales of FMCG companies to pick up owing to the festive season. "We see early signs of a revival in mass and rural consumption, against a backdrop of weak aggregate demand," Emkay Global said in a report this week. Owing to this, FMCG companies could gain further despite elevated valuations, the brokerage said. However, the brokerage cut the rating to 'neutral' due to rich valuations, despite a positive operating environment. 

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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 Tanima Banerjee

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