GOLDEN RULES FOR TRADING

FMCG Stock Outlook for the week - 23 to 27.03.2015

FMCG Stock Outlook for the week - 23 to 27.03.2015

Stocks of fast-moving consumer goods companies are seen range bound next week on expiry of the derivative contracts and lack of fresh triggers.

Despite being a defensive sector, we do not expect much gain in FMCG, as among the
defensives, pharma and IT (information technology) stocks are being favoured more.

The FMCG stocks could get some support from short covering ahead of the derivates contracts expiry. ITC may be in focus as it is looking to expand its presence in the personal care segment after acquiring Savlon and Shower-to-Shower from Johnson & Johnson. Fundamentally, FMCG companies may show improvement in operating margins in Jan-Mar on the back of a decline in raw material costs.

However, a concern over slow growth in sales volumes persists and this trend is likely to
continue for the next few months, keeping the upside in stocks limited. Most stocks in the sector have rich valuations currently, which will also restrict the gains in many FMCG companies.