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Informist, Thursday, Apr. 17, 2025

MUMBAI – Shares of fast-moving consumer goods companies are expected to be in positive territory next week on the back of cooling headline inflation and optimism on account of the India Meteorological Department's forecast of above-normal monsoon this year. However, the trade tensions between the US and China will be an important deciding factor each day, and continues to cast a shadow on overall market sentiment.

The weather bureau has forecast above-normal southwest monsoon rainfall for 2025, with the overall rainfall during Jun-Sept likely to be 105% of the long-period average.

The sectoral Nifty FMCG index is expected to rise further next week. Its resistance is pegged at 58400 points and the index may find support at 55500 points. Thursday, the Nifty FMCG closed 0.6% higher at 56674.20 points, with United Breweries, Nestle India, and Varun Beverages being the top gainers and ending 1.4-1.8% higher.

Early commentaries from some FMCG majors such as Marico, Dabur, and Godrej Consumer Products suggest that the overall demand environment continues to be sluggish, Nirmal Bang Institutional Equities said in a report. This is amid inflationary pressures across the commodity price basket. The gross margin of several FMCG companies is likely to contract due to inflated raw material prices, the brokerage said. It expects the FMCG companies in its coverage universe to clock revenue growth of 6% on year.

Inflation in the clothing and footwear segment has been rising in urban areas while moderating in the rural areas, Systematix Institutional Research said in a report. This is largely due to rising wholesale inflation in apparel. The Nifty FMCG had outperformed other sectoral indices last week, helped by falling crude oil prices and the Reserve Bank of India's forecast of softer inflation.

The March quarter earnings of FMCG major Hindustan Unilever are expected to be positive, Jatin Gedia, technical research analyst at Mirae Asset Sharekhan, said. Valuations of Hindustan Unilever, Marico, and Godrej Consumer Products reflect slowing growth and declining returns, global brokerage CLSA said in a note, according to reports. Additionally, the premium multiples of these companies are hard to justify, the broking firm said. The top six FMCG players are overvalued by 52% on an average 15-year regression as compared to their US and global peers, it added.

Tata Consumer Products is slated to report its March quarter earnings Wednesday with its net profit seen up nearly 44% on year and sales up nearly 16%, according to an average of 12 broking firms. Hindustan Unilever and Nestle are expected to release their earnings on Apr. 24. Hindustan Unilever is expected to report 3% on-year growth in net profit while sales are likely to be down 0.9%, according to an average of 15 brokerages. Nestle's net profit for the quarter is likely to decline nearly 7% on year with a likely 4% rise in sales, according to an average of 13 broking firms.

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

End

Reported by Simran Rede

Edited by Rajeev Pai

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