FMCG Stocks Outlook for the week – 15 to 19.06.2015
(Consumer
goods companies is seen remaining weak)
( www.rupeedesk.in )
The
overall bias for shares of fast-moving consumer goods companies is seen
remaining weak, but some bouts of bargain buying is likely next week after
recent declines. The CNX FMCG Index declined more than 6% in the last two
weeks.
The
rise in India's inflation based on the new Consumer Price Index to 5.01% in May
from 4.87% in April is seen weighing on FMCG stocks. Higher inflation dents
demand for consumer products. Concerns over weak monsoon forecast for this year
and increased regulatory scan on processed food products had weighed on FMCG
stocks in past few days.
After
the ban on Nestle India Ltd's Maggi noodles, the Food Safety and Standards
Authority of India blacklisted 500 products that failed to get approvals, and
many of them were found to have high levels of heavy metals, caffeine, and iron
filings. The food regulator has also ordered state food safety inspectors to
test samples from as many as seven companies, including ITC, Glaxosmithkline
Consumer Healthcare, and Nestle India. Hindustan Unilever decided to withdraw
its Knorr Chinese range of instant noodles, as the food regulator's approval
for the product was still pending.
The
India Meteorological Department has cut its forecast for India's monsoon rains
this season to 88% of long-period average from 93% earlier. During Jun 1-12,
total rainfall in the country was 46.5 mm, 1% above normal. With uncertainties
prevailing over monsoon, and increasing concerns over safety of packaged food products,
the overall sentiment is seen weak for the FMCG sector. Monsoon rains are
crucial for the FMCG sector, as it has significant bearing on rural demand for
consumer products.
