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Informist, Friday, Jun. 20, 2025

MUMBAI – Analysts are unsure of the direction stocks of fast moving consumer goods commpanies will take next week. As the market lacks triggers and awaits developments in the conflict between Israel and Iran, shares of FMCG companies are likely to take cues from the overall market direction, analysts said.

"FMCG index has reached the 50% Fibonacci retracement support levels (54123) of previous up move from 50200 to 56785," said Vipin Kumar, assistant vice-president of derivatives and technical at Globe Capital Market. If the Nifty FMCG manages to sustain above 55050 points then it may move up towards 56000 points, Kumar of Globe Capital said. However, a fall below 54100 points might take the index further down towards 53200 levels, he added.

The consumption in the March quarter remained robust, according to SBICAPS Securities. The sales in the sector grew 11% on year in the March quarter, according to NielsenIQ. The demand in rural areas has outpaced that in urban areas by four times during the quarter, as small players gained ground, SBICAPS Securities said in a report. This was supported by higher sales of two-wheelers and tractors in May, despite a high base. 

Lower inflation, "huge" cut in interest rates, above-normal rainfall, and changes in income tax slabs seems to bode well with the consumption and spending in the coming quarters, analysts said. Unseasonal rains had dampened discretionary consumption in the March quarter, eventually softening volumes as higher valuation premiums led to selective profit-taking in staples, Prabhudas Lilladher Asset Management had said in a report Tuesday.

The recent rally in Indian equity market on the back of improving growth prospects of the economy with a fall in inflation and rise in the country's GDP growth. However, the one-month absolute return from the FMCG sector was just 2% in May compared to that of 23% from the realty sector, ICICI Prudential Mutual Fund said in a report Tuesday.

The FMCG stocks are at high valuations, but the growth in the sector has been subdued in the past few months. "This essentially suggests potential operating deleverage ahead, which could weigh on the high valuations," Nuvama said in a strategy report Tuesday.

Bloomberg's forecast for earnings per share compound annual growth rate for 2024-25 (Apr-Mar) to FY26 of Nifty 50 companies is expected to be 13%, driven by FMCG sector among others, InCred Equities said in a report Monday. Sectors such as defence, metals, financial services, and automobiles led the recent rally in the Indian equities. However, stocks such as information technology, pharmaceuticals, oil and gas, FMCG, and realty were the laggards, the report said. 

On Friday, the Nifty FMCG closed at 54630.95 points, up 0.6% and snapped a three-day falling streak. The index was flat over this week, but fell nearly 3% over 30 days, sharply underperforming the benchmark Nifty 50 index, which rose 1.5%. Among its constituents, Tata Consumer Products was the top gainer, up 1.1%, while United Breweries was the worst hit, down 5%.

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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 Deepshikha Bhardwaj

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