FMCG Stocks Outlook for the week - 30.03.2015 to 01.04.2015
Stocks
of fast moving consumer goods companies are likely to trade rangebound with a
slightly negative bias next week, after the sharp correction this week. On
Monday, ITC stock will be in focus as the Delhi government yesterday notified
ban on sale of most tobacco products, except cigarettes.
Concern
that the government will soon announce revised rules related to the pictorial
warnings in cigarette packs has hurt investor sentiment, pulling down stocks of
the cigarette maker by more than 3% this week. However, the government has
postponed a decision on the same, which came as a major relief to the Street.
Broader
equity indices seen under pressure on account of the ongoing geopolitical
tensions in
West
Asia, some market participants believe that investors could shift to defensives
sectors such as FMCG and pharmaceuticals.FMCG sector looks good as weak global
sentiment is unlikely to impact the defensive sector.
Further,
the government's push for the implementation of the GST (Goods and Services
Tax)
augurs
well for the sector. The top picks in the FMCG space are Godrej Consumer
Products and Marico.
Fundamentally,
FMCG companies' operating margins may improve in the Jan-Mar quarter due to decline
in raw material costs. However, concerns over slow growth in sales volumes
persist and this is likely to continue for the next few months, keeping the
upside in stocks limited.
