Stocks of fast-moving consumer goods companies are expected to under-perform the market next week as investors are likely to shift their focus from defensive sectors to other more lucrative ones due to improvement in risk appetite.
Risk appetite improved globally because the European Central Bank, post its policy meeting Thursday, announced a programme to buy the short-term bonds of debt-ridden Eurozone nations such as Italy and Spain. Friday, domestic indices ended 2% higher in reaction to the ECB move.
Dabur India is seeing strong growth in sales volumes, and Marico's margins are seen rising as raw material costs have declined substantially. In the past few months, foreign institutional investors have been buying shares of big FMCG companies such as ITC while domestic investors have been active in stocks of mid-cap companies such as Marico.
There have been expectations of profit booking in shares of FMCG companies as they have been trading at high valuations for some time. This week, ITC shares came under profit booking.
