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Informist, Friday, Nov. 29, 2024

MUMBAI – Fast moving consumer goods companies' shares have likely found a short-term bottom and are likely to bounce back in the coming week following a sharp decline in the past few months, a technical analyst said. A technical pull-back is on the cards for FMCG shares going ahead, the analyst said. Players in the sector lamented the slowdown in demand in the urban areas in the September quarter, even as there was a recovery in demand from rural areas.

"Weak commentary from the managements in the September quarter flagged urban slowdown in addition to stiff competition from the direct-to-channel players, slowdown in general trade," said Sandeep Abhange of LKP Securities. The weak demand trend is expected to continue in the December quarter and is likely to recover only in the final quarter of 2024-25 (Apr-Mar) or at the start of FY26, Abhange added. The recently concluded festival season saw companies booking reasonable volume growth, but they might not see a sharp recovery, Abhange said. Valuations of the FMCG companies are quite reasonable, the fundamental analyst said. 

"Though the recent data during the festive season has shown a slight uptick, going forward we expect urban consumption demand to remain muted, given tight macro-prudential measures in household credit by the Reserve Bank of India," Goldman Sachs said in a report on Friday. Goldman Sachs expects muted urban consumption to continue in the first six months of 2025, as the lagged impact of retail credit slowdown passes through following tighter macro-prudential measures by the RBI.

Antique Stock Broking Ltd. in a report said that based on its on-ground interactions, the demand sentiment remained weak as the festive season failed to drive recovery in offtake. "With the delay in the winter season, offtake, and preloading of winter products have been below expectations. We expect the winter portfolio to pickup in November," the firm said.

In the short term, Dabur Ltd., Marico Ltd., and Tata Consumer Products Ltd. look to be good options for investors, a technical analyst said. While the Nifty 50 and the Sensex gained roughly a percent in the week concluded today, the Nifty FMCG index posted gains of 1.7%.

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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 Anand J.C.

Edited by Deepshikha Bhardwaj

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