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Informist, Friday, May 23, 2025

MUMBAI - Shares of fast-moving consumer goods companies are likely to rise slightly next week, analysts said. Most FMCG stocks ended higher this week owing to softer inflation and hopes of a revival in urban demand. Although the Nifty FMCG index has fallen in three of the past four weeks, the outlook on the sector remains bullish, according to analysts. 

The Indian economy seems to be in recovery mode with food inflation at 1.78% in April, its lowest level since Nov. 21, while CPI was at 3.16%, the lowest level since August 2019. "Although inflation seems to be at a very low level and might show an uptick in coming months, normal monsoons will keep a check on inflation and help boost demand from both urban and rural India," Prabhudas Lilladher Institutional Equities said in a report.

The benefit of changes made to the income-tax slabs proposed in the Union Budget for 2025-26 (Apr-Mar) is widely seen benefitting consumers, analysts said. They expect the demand to show improvement from the December quarter as it was affected last year due to elections, intense heat waves and dry marriage season in the first half of 2025, according to analysts and companies.

"We believe that the combined effect of low inflation, declining interest rates and normal monsoons starts to boost demand. Given the multiplier of 2.5x to tax cuts, the expected surge in demand is likely to be around Rs2500bn (INR 2.50 trillion)," Elara Institutional Securities said in a report. The brokerage expects discretionary spending to rise more than other segments.

Management commentaries project better revenue, aided by a recovery in rural demand, distribution expansion, and rise in pricing growth. The current valuations are better dispersed, with fewer extremes distorting the index, an analyst at a domestic broking firm said. On Friday, the Nifty FMCG index closed nearly 2% higher at 56502.05 points and was one of the top gainers among sectoral indices.

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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 Simran Rede

Edited by

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