Stocks of major fast-moving consumer goods companies are expected to continue to rise, outperforming the market in the week ahead. This week, all major FMCG stocks gained with Hindustan Unilever rising 2.9%, Dabur India 3.2%, and ITC 1.2%. Sustained buying, mainly from domestic institutional investors, lifted the stocks. The BSE FMCG index gained 1.8% as compared to the 0.5% rise witnessed by broader indices.
Stocks of Hindustan Unilever are trading at nearly 40 times price to equity, while those of Marico are trading around 34 times price to equity. Market watchers see this trend continuing given the strong earnings posted by FMCG companies. The India consumption story is strong, which is leading to sustained buying, as FMCG faces the consumer directly and fulfils basic needs. Major FMCG companies are also expected to continue showing sustained, high single-digit and double-digit sales volume growth in the near term. It is these performance expectations that are leading to buying of these stocks.
www.rupeedesk.in
