FMCG Stocks Outlook for the week – 29.06.2015 to 03.07.2015
In
range; bias positive on good monsoon progress
Stocks
of fast-moving consumer goods companies are seen trading in a range next week,
but the bias remains positive due to good progress of the monsoon, which has
raised prospects of improvement in rural demand for consumer products. The
India Meteorological Department said the southwest monsoon today covered the
entire country and total rainfall during Jun 1-26 was 27% above normal at 167.5
mm. While there is optimism over revival in demand, ITC said in its annual
report that high growth in the FMCG sector is still a few quarters away. The
company, however, expects rebound in FMCG growth in medium term.
For
the cigarettes segment, ITC sees the current financial year to remain
challenging due to taxation and regulatory issues. Market participants will
keep an eye on updates of reports that Hindustan Unilever may buy the Indulekha
brand from Kerala-based Mosons Extractions Pvt Ltd for around 5 bln rupees.
FMCG majors are looking to improve margins by adding niche and premium products
to their portfolio. FMCG stocks will also track the movement in the broader
equity markets, which are seen consolidating next week. The markets will keep a
watch on Greece's negotiations with its European lenders. There are talks in the
market of a surprise rate cut by the Reserve Bank of India due to
better-than-expected monsoon, but some analysts remain sceptical on such a move
by the apex bank.
