FMCG Stocks Outlook for the week - 28.11.2016 to 02.12.2016
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The stocks of fast moving consumer goods companies are expected to rise further next
week as the cash crunch situation due to demonetisation of 500 and 1,000 rupees notes is
seen easing. On Nov 8, Prime Minister Narendra Modi announced that 500 and 1,000
rupee notes would no longer remain legal tender effective midnight, which slowed down
the cash circulation in India.
Consequently, the liquidity with FMCG traders and wholesalers remained tight due to
which business took a hit. The situation is likely to ease now. FMCG companies and
wholesalers have also been extending credit to retailers to ease the working capital deficit
being faced.
Consumer durable goods such as electronic items and white goods are likely to take the
brunt of the hit as consumers are likely to refrain from investing on items of high value in
the near term. Spending on essential items will not stop. People, whether in the urban or
rural area will not stop eating.
The expenditure on premium food and other FMCG products, however, could take a hit as
people are shying away from spending on non-essential items.
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