FMCG stocks Outlook for the week 07 to 10.10.2014

FMCG stocks Outlook for the week 07 to 10.10.2014 )

We believe that large cap fast moving consumer goods companies such as Hindustan Unilever and ITC could see some buying in the week ahead as portfolio managers are likely to move their investments into safer stocks ahead of the Jul-Sep result season.

ITC, HUL could see some buying given that they are defensive and unlikely to be very volatile in the result season, also they have fallen about 2% this week, hence we could see some bargain buying. with an institutional firm. For the week ending Oct 1, the FMCG index fell 1.5%, worse than the 0.2% fall in the benchmark Sensex.

In a report released earlier his week, Goldman Sachs assigned a buy rating on ITC with a target price of 416 rupees. Based on ITC's current valuation discount to the sector, we estimate the market is pricing in cigarette volume decline of 22%, which we believe is unlikely. While fundamentally is recommending ITC with a 1-3 year perspective, technical also recommend buying the stock for a short term.