FMCG Stocks Outlook for the week – 26 to 30.12.2016
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FMCG Stocks Outlook for the week – 26 to 30.12.2016
The stocks of fast moving consumer goods companies are seen under pressure in the coming week as tepid sales post demonetisation of high-value currency continues to hurt the sector. The short-term focus now will shift to the Budget for 2017-18 (Apr-Mar) due in February. Post demonetisation, it will be important to see what incentives or policy announcements the government makes to revive the consumption story. The government had on Nov 8 announced that old 500-, 1000-rupee notes would no longer be valid legal tender. The demonetisation of high-value banknotes broke the back of FMCG sales and forced most traders to "de-stock". The market participants will also be keenly watching for the final word from the meeting of the Goods and Services Tax Council. Though the real impact of the goods and services tax is likely to affect the consumer space only in the next two-three years, the immediate interest could lie in the compensation laws and other rules announced for the sector. There has been some information that the GST rate on tobacco could be as high as 40%. If that is the case, companies like ITC Ltd could suffer.
