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Informist, Friday, Oct. 4, 2024

MUMBAI - After the recent losses, analysts expect stocks in the fast-moving consumer goods sector to consolidate in the upcoming sessions. The Nifty FMCG index Friday closed 1.7% lower at 63380.05 points. The index fell for two straight weeks, losing nearly 4% in this period. However, the fundamentals of the sector remain strong, with analysts saying that a good monsoon and strong festival demand will drive growth for the sector in the coming quarters.

Last week, the Nifty FMCG index fell more than 2,000 points as investors took out profits, Jatin Gedia, technical research analyst at Sharekhan, said. While select companies in the sector such as Dabur India look weak, shares of Hindustan Unilever and ITC will likely outperform, Gedia said.

Demand from urban areas has been weak due to high food inflation and tariff hike by telecommunication majors, Abneesh Roy, executive director at Nuvama Institutional Equities, said in an interview to CNBC TV-18 Friday. Meanwhile, rural demand has seen improvement driven by the above average monsoon, analysts said. "We expect a pronounced rural recovery in (Oct-Dec) as harvest money will reach the hands of rural folks," Nomura Global Market Research said in a report.

"The demand trend saw a minor uptick in (Jul-Sept), while earnings growth slowed as margin benefits are in the base," Emkay Global said in a report. The rise in growth on a quarterly basis is likely to be driven by volume, the brokerage said. The brokerage expects improvement in the volume growth for HUL, Britannia Industries, and Marico.

So far, Dabur and Marico have reported their quarterly update for Jul-Sept. Dabur expects its consolidated revenue for the September quarter to fall by mid-single digit. The pipeline correction is not a rare thing in FMCG, but Dabur's quantum was surprising, Roy of Nuvama said. The September quarter was the weakest quarter for the company in four years, Investec reportedly said. The brokerage now expects a 5% decline in the company's consolidated revenue in the reporting quarter. It sees a 15% decline in earnings before interest, taxes, depreciation, and amortisation and 17% decline in net profit.

TOP HEADLINES
* Marico says Jul-Sept consol revenue growth remains in high single digits
* Andhra govt notifies new liqour policy, calls bids for pvt retail outlets
* Tata Consumer merged co Nourishco Beverages' CEO Vikram Grover resigns
* Dabur India says consol revenue may fall by mid-single digit in Jul-Sept
* ITC arm buys cloud consulting co Blazeclan Tech for INR 4.85 bln

Following are the resistance and support levels for the sector's key stocks for next week, as per calculations based on their prices on the National Stock Exchange:

End

Reported by Anjali Singh
Edited by Ashish Shirke

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