Nifty FMCG index rises to a record high. Experts recommend buy on these stocks
Premium- Nifty FMCG index has been rising due to ease in commodity prices and fast approaching festival season, believe experts
Stock market today: Following fast approaching festive season and ease in commodity prices, Nifty FMCG index has climbed to life-time high of 43,326.65 levels. Nifty FMCG index today opened upside and went on to climb to its life-time high of 43,326.65 mark, logging more than half per cent rise on Wednesday trade session.
According to stock market experts, due to lowering commodity prices, especially palm oil prices and upcoming long festive season in India, FMCG companies are expected to get benefit of favourable volume and margin conditions. They said that index may go up to 43,500 to 44,000 as these triggers for the FMCG stocks are going to exist for short to medium term. They said that shares of ITC and HUL constitute around 55 per cent of the net strength of the index and both these stocks are in uptrend. They said that these two FMCG stocks are going to further fuel the Nifty FMCG index in next 2-3 months.
Speaking on the reason for Nifty FMCG index rising to a record high, Anuj Gupta, Vice President — Research at IIFL Securities said, "Nifty FMCG index has surged to record high due to ease in commodity prices, especially palm oil prices and fast approaching long festive season in India. These two are making a strong combination of favourable volume and margins for companies dealing in FMCG products. This rally in FMCG stocks and the Nifty FMCG index is expected to continue as festive season is going to exist for next two to three months."
On what chart pattern indicates about the Nifty FMCG index, Sumeet Bagadia, Executive Director at Choice Broking said, "Nifty FMCG index has surged to record high and the rally is expected to continue and it may go up to 43,500 and 44,000 levels in short term. Positional investors are advised to keep 42,500 as strong support for the index and any dip from current levels should be seen as buying opportunity."
Sumeet Bagadia of Choice Broking went on to add that ITC shares and HUL shares constitute around 55 per cent strength of the Nifty FMCG index (ITC constitute 29.18 per cent whereas HUL constitute 25.91 per cent) and both these stocks are in uptrend. He said that ITC stocks may go up to ₹330 apiece levels in short term whereas HUL share price is expected to go up to ₹2800 apiece levels in short term. He advised positional investors to buy ITC and HUL shares for the given targets as these stocks will continue to fuel rally in Nifty FMCG index.
In year-to-date (YTD) time, Nifty FMCG index has surged around 15 per cent whereas key benchmark indices Nifty 50 and BSE Sensex have risen just above 1.65 per cent in this period. So, Nifty FMCG index has generate alpha return in YTD time.
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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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