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Informist, Friday, Sep 20, 2024

MUMBAI – Shares of fast-moving consumer goods companies are expected to consolidate next week after their recent rally, analysts said. Even though FMCG stocks started the week on a negative note, buying interest seen in the latter half of the week led these stocks to end higher this week. 

The Nifty FMCG index is making new highs every day, said Shiju Koothupalakkal, technical and derivatives analyst at Prabhudas Lilladher. The immediate target for the index is at 66900 points, while the support is seen at 64350 points. Today, the Nifty FMCG index ended 1.4% higher at 65870.80 points. The index has extended gains for the third straight week. 

Select FMCG stocks fell earlier this week after the government increased basic customs duty on crude palm oil, soybean oil, and sunflower seed oil to 20% from nil. The government has also hiked customs duty on refined palm oil, soybean oil, and sunflower oil to 32.5% from 12.5%. The hike in the basic customs duty on these will increase the raw material cost for FMCG companies and put pressure on their gross margins, Saral Seth, vice president of institutional equities at IndSec Securities, said. 

However, in the short-to-medium term, the raw materials inflationary environment should be positive for organised companies as they take price hikes that are lower than inflation and gain market share from unorganised players, Nomura said in a report this week. "Along with an improving volume growth outlook, we expect the product price cuts to anniversarize and price growth to come back from 2HFY25F (Oct-Mar), thus improving overall sales growth," Nomura said. 

The rural segment is poised for growth recovery where FMCG companies have taken action, Emkay Global said in a report this week. These companies have also enhanced the focus on the urban segment, where select channels continue to see consumer adoption, leading to faster growth. Going forward, winter is expected to be intense with players having a winter-centric portfolio geared to leverage opportunity, the brokerage added. 

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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 Manisha Baxla

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