Stocks of major fast-moving consumer goods companies are seen up in the week ahead tracking the positive Apr-Jun earnings of companies such as ITC and Hindustan Lever. Index heavyweight Hindustan Unilever's Apr-Jun earnings, declared Monday and aided a 4.2% rally in its stock during the week. Similarly, stocks of ITC Ltd gained during the week as the company's Apr-Jun earnings came tad above market estimates, but its stocks pared gains on profit booking. Marico Ltd and Godrej Consumer Products Ltd will declare their Apr-Jun earnings on Aug 3 and Aug 4, respectively, and these will dictate the trend in these stocks.
The companies are expected to post a healthy growth in earnings on robust sales volume growth and lower raw material costs. Over the past week, the BSE FMCG index gained 0.8% on positive Apr-Jun earnings of Hindustan Unilever and ITC, while the broader indices lost nearly 2% of their value. The momentum in the FMCG stocks is expected to continue through next week. Going ahead, there are short-term concerns about the companies' profitability, given the fact that weak monsoon rains will affect their performance by escalating raw material costs and curtailing rural disposable income and demand. Stocks of FMCG companies are expected to continue outperforming the broader market due to economic slowdown that has affected other sectors more than FMCG companies.
(www.rupeedesk.in)
