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We expect stocks of fast-moving consumer goods companies to consolidate at current levels next week, after outperforming the benchmark indices over the last two weeks. We believe there will be further action in FMCG stocks only after Hindustan Unilever announces its results for Jan-Mar quarter on Apr 29. FMCG stocks have outperformed over the last two weeks, We expect most stocks to consolidate at current levels. The next trigger for FMCG stocks will come when Lever (HUL) declares its results. We will keenly watch out for the sales volume growth numbers that HUL posts in its results on Apr 29. We expect sales volumes to grow by 5% over last year, but a lower than expected growth could put pressure on stock prices. The recent fall in commodity prices especially the price of crude is positive for FMCG stocks but that is only if crude prices stabilise at these levels. Crude prices are important for FMCG companies as linear alkyl benzene, a key raw material in detergents, is a derived from crude oil. Also, most of the packing material used by FMCG companies is made from by-products of crude oil.
Over the past week, the broader market indices have risen by over 4% each, while the BSE-FMCG index gained over 5% due to rise in heavyweight ITC's stock price. India's largest cigarettes manufacturing company ITC raised prices of Gold Flake Kings and Wills Navy Cut cigarettes, two of its best selling products. Reacting to this, the company's stocks gained as much as 7.6% over the past week. ITC has the highest weightage on the BSE-FMCG index.
