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Stocks of fast-moving consumer goods companies are likely to stay at current levels in the coming sessions due to their already high valuations. Though domestic shares are seen rallying next week, gains in fast-moving consumer goods' shares will be capped due to their bloated value. Local equities gained last week tracking positive global cues and as India's gross domestic product grew on expected lines at 5.3% in Jul-Sep.
Shares of sector heavyweight ITC is currently trading at 37.8 times the company's 2011-12 (Apr-Mar) earnings, while those of Hindustan Unilever are trading at 46 times the company's 2011-12 earnings. Among mid-cap fast-moving consumer goods' stocks, Marico and United Spirits continue to be a top picks. Shares of the two companies are trading at 42.2 times and 104.5 times their respective 2011-12 earnings.
Over the past week, the BSE's FMCG index underperformed broader indices. This is expected to continue in the week ahead, as the indices are expected to see recovery that is more broad-based.
