Stocks of fast-moving consumer goods companies are seen down next week, as continued bullishness in overall market sentiment will reduce investor bets in defensive sectors. The domestic indices have risen over 8% so far in September. Overall investor risk sentiment has improved after the government introduced several reform initiatives. Investors have been diverting from FMCG companies to sectors such as retail, aviation, and infrastructure, where values are relatively attractive.
Stock movement in FMCG counters will reflect the overall market trend due to the absence of any major sector-specific or stock-specific trigger. FMCG counters are likely to move in the opposite direction of local indices. FMCG companies are likely to maintain their volume growth and operating margins in Jul-Sep as revival in monsoon rainfall will ensure stable raw material prices.
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