www.rupeedesk.in
Stocks of major fast-moving consumer goods companies may move sideways and largely remain flat in the week ahead, as investors will stay away from these counters due to high valuations. Over the past few weeks, the BSE-FMCG index has underperformed the broader market, as investor interest in other sectors such as banking, real estate, and metals has increased. Investors are overlooking FMCG stocks for fresh buys and investors who bought these at lower levels earlier are staying put in their investments.
ITC stocks are trading at 24 times the company's estimated 2013-14 (Apr-Mar) earnings, Hindustan Unilever's stocks are trading at around 33 times the company's estimated 2013-14 earnings and Colgate Palmolive India's stocks are trading at 27 times the company's estimated 2013-14 earnings. Stubbornly-high valuations of FMCG stocks are expected to keep investors away, as the action may continue to shift to other sectors. The fundamentals of FMCG companies remain strong, however, and good demand may allow them to hike prices. FMCG companies to report strong sales volume and value growth in Oct-Dec despite the slowdown in overall economy.
