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We expect stocks of fast moving consumer goods companies to have a positive bias in the week ahead, as investors in an increasingly volatile markets scout for stocks with strong balance sheets. Most FMCG companies have cash-rich, healthy balance sheets. Hence, shareholders are hopeful of positive corporate actions in the form of special dividends, bonus or buyback in most of them. We believe that since most FMCG companies are cash rich, the managements of these companies have the leeway to take decisions like a buyback, which will keep stocks in the sector trading at higher valuations. FMCG companies are currently commanding as compared to the benchmark indices as the companies from the category have stronger balance sheets and better growth visibility than companies from other sectors.
We expect stocks of fast moving consumer goods companies to have a positive bias in the week ahead, as investors in an increasingly volatile markets scout for stocks with strong balance sheets. Most FMCG companies have cash-rich, healthy balance sheets. Hence, shareholders are hopeful of positive corporate actions in the form of special dividends, bonus or buyback in most of them. We believe that since most FMCG companies are cash rich, the managements of these companies have the leeway to take decisions like a buyback, which will keep stocks in the sector trading at higher valuations. FMCG companies are currently commanding as compared to the benchmark indices as the companies from the category have stronger balance sheets and better growth visibility than companies from other sectors.
