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Stocks of fast-moving consumer goods companies are likely to move in a narrow range with a negative bias next week due to likely profit booking by investors. Value of FMCG stocks are high enough to permit some profit booking in the week ahead. Consequently, we see the BSE-FMCG index under-performing the broader market in the week ahead. Over the past week, broader indices rose due to passage of foreign direct investment in multi-brand retail in Parliament.
Broader indices are expected to gain momentum in the next few sessions as the government is likely to take up further reforms in the on-going Winter Session of Parliament.However, the performance of FMCG stocks is seen subdued due to their already high values. Stock of FMCG heavyweight ITC is currently trading at around 37.8 times the company's 2011-12 (Apr-Mar) earnings per share, while that of Hindustan Unilever is trading at around 46 times the company's 2011-12 earnings. Sale of products such as moisturising creams, balms, lozenges, and formulations such as chyawanprash rise during winter.
