www.rupeedesk.in
Stocks of fast-moving consumer goods' companies may correct 2-3% in the coming week. However, the correction will be limited due to bargain buying in frontline stocks such as ITC and Dabur. The steps announced by the Reserve Bank of India yesterday to tighten liquidity and in turn contain rupee volatility, are likely to have a negative impact on the overall equity market early next week. However, since FMCG stocks are seen as defensive in nature and most companies in this sector are sitting on large cash balances, they are likely to be unaffected by the RBI measures. Stocks of FMCG companies have corrected by almost 10% in the past two weeks and long-term investors like long-only equity funds and pension funds will start buying these stocks on a further 2-3% correction.
FMCG stocks have corrected from their peak valuations. ITC that was trading at 30 times two-year forward earrings has come down to 25-times, investors can
buy the stock if it correct by another 3-5%. Mumbai-based FMCG major Marico is scheduled to detail its earnings Monday. We have a cautious view on most stocks in the FMCG sector. We expect a short-term bounce in tobacco-major ITC. We expect Marico to remain range-bound and trade between 190 and 220 rupees in the week ahead. Below are Thursday's closing prices, in rupees, of key FMCG stocks, on the National Stock Exchange, compared with those on Friday in the previous week.
Stocks of fast-moving consumer goods' companies may correct 2-3% in the coming week. However, the correction will be limited due to bargain buying in frontline stocks such as ITC and Dabur. The steps announced by the Reserve Bank of India yesterday to tighten liquidity and in turn contain rupee volatility, are likely to have a negative impact on the overall equity market early next week. However, since FMCG stocks are seen as defensive in nature and most companies in this sector are sitting on large cash balances, they are likely to be unaffected by the RBI measures. Stocks of FMCG companies have corrected by almost 10% in the past two weeks and long-term investors like long-only equity funds and pension funds will start buying these stocks on a further 2-3% correction.
FMCG stocks have corrected from their peak valuations. ITC that was trading at 30 times two-year forward earrings has come down to 25-times, investors can
buy the stock if it correct by another 3-5%. Mumbai-based FMCG major Marico is scheduled to detail its earnings Monday. We have a cautious view on most stocks in the FMCG sector. We expect a short-term bounce in tobacco-major ITC. We expect Marico to remain range-bound and trade between 190 and 220 rupees in the week ahead. Below are Thursday's closing prices, in rupees, of key FMCG stocks, on the National Stock Exchange, compared with those on Friday in the previous week.
