FMCG Stocks Outlook for the week (02 - 06.Jul.2012)

[rupeedesk]

RUPEE DESK: FMCG Stocks Outlook for the week (02 - 06.07.2012)

 

Stocks of fast-moving consumer goods companies are expected to continue rising in the week ahead on positive investor sentiment, but stock-specific triggers are unlikely. FMCG stocks have been doing better than broader markets over the past few months given their defensive nature and good business outlook. They are expected to continue their winning streak over the next week as well. Yesterday, the broader indices the Sensex and the Nifty both ended up over 2% as investors were upbeat on the positive outcome of the European Union Summit, in which policymakers of the Eurozone approved a 120-bln-euro package to boost growth in the region's most vulnerable economies. Over the past week, while the Nifty and Sensex indices gained around 2.7% each, the BSE-FMCG index gained 2.4%. Hindustan Unilever Ltd was the only major FMCG stock to have shed value over the week. While benign commodity prices are benefiting FMCG companies' margins currently, the ongoing quarter is seen challenging for them from a volume growth standpoint, as the spectre of weak monsoon looms.

The cumulative rainfall in the country between Jun 1 and Jun 29 was 27% below normal. Poor monsoon could result in lower rural consumption of FMCG products as incomes decline on weak crops, Vinita Bali, chief executive officer of Britannia Industries Ltd said in an interview to ETNow television news channel yesterday. As much as 50% of Britannia Industries' sales come from rural markets, as is the case with most other big FMCG companies.

 

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