Aam Aadmi�s welfare to fare well for FMCG

SECTIONSAam Aadmi�s welfare to fare well for FMCGET BureauLast Updated: Jun 05,
2024, 08:48:00 AM ISTWhatsapp Follow Channel
FOLLOW US
SHARE
FONT SIZE
SAVE
Synopsis
FMCG stocks favored as money exits PSU stocks. Strengthening consumer sentiment,
rural market support are priorities for BJP.
FMCG---AgenciesAgencies
On a day when the Sensex plunges over 5,000 points, one can trust the FMCG stocks -
especially the consumer staples - to live up to their reputation as the rescuer of
last resort.

HUL closed nearly 6% higher, Dabur 5.6%, Nestle over 3%, Colgate Palmolive nearly
4.5%, Marico over 3%, Britannia over 3%, and Tata Consumer Products 1.7%. Among the
leading FMCG companies, ITC was the only one to close 2.4% lower - ahead of the
crucial vote on the demerger of its hotel business.

With a weaker mandate, the agenda for the BJP-led NDA government is likely to
switch from growth to welfare with the government being under pressure to roll out
populist measures for boosting consumption. In a bearish market, the TINA (there is
no alternative) factor burnishes the allure of otherwise defensive FMCG stocks.

According to a senior FMCG analyst who has tracked the sector for over two decades,
there are two main reasons for the interest in FMCG stocks. "First, during
uncertainty, investors tend to move from high beta stocks to low beta ones.
Secondly, the upcoming budget may focus on stimulus measures and increase
disposable income," he said.
DID YOU KNOW?
Only 5% of Indians know how to invest their money. Join them now!

VIEW DETAILS �

Within the broad consumption theme, consumer staples are holding up while
discretionary are down. For instance, the stock of Devyani International closed
over 2.5% lower, Jubilant FoodWorks closed just 0.5% higher, Titan closed 0.6%
lower and TTK Prestige closed 1.5% lower for the day.

"As there is no clear mandate for BJP, they will have to work on strengthening the
consumer sentiment - especially providing support for rural markets," said Sachin
Bobade, vice president-research at Dolat Capital. "In the stock market, the money
that is exiting the PSU stocks is finding a safe haven in the FMCG stocks. And till
the markets remain dicey, the FMCG stocks shall remain in favour."

According to Abneesh Roy, executive director at Nuvama Institutional Equities, the

new government is likely to be more consumption-focused than earlier when it was
more focused on capex and infrastructure. The pricing growth for consumer
companies, which was negative in FY24, is likely to come back in FY25. Raw material
prices are also benign - aiding profitability. The sector valuations are reasonable
when compared to five years ago - especially for Dabur, HUL, Britannia, Marico and
Asian Paints.

A good monsoon, a supportive budget and a surge in consumer demand ahead of the
festive season are likely triggers for the buying interest in these stocks, which
have seen subdued performance on bourses barring a few exceptions.
Poll Trackers
How turncoats fared in 2024 Lok Sabha polls
Who will be the kingmakers to help Modi form the govt?

(You can now subscribe to our ETMarkets WhatsApp channel)

READ MORE NEWS ON
FMCG StocksConsumer StaplesSensexWelfareMarketInvestorsBudgetGovernmentPopulist
MeasuresConsumption
(What's moving Sensex and Nifty Track latest market news, stock tips, Exit Polls
News, Election Results News and expert advice, on ETMarkets. Also, ETMarkets.com is
now on Telegram. For fastest news alerts on financial markets, investment
strategies and stocks alerts, subscribe to our Telegram feeds .)

Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and
Sensex Today.

Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price,
Infosys Share Price, Wipro Share Price, NTPC Share Price

...more
ADD COMMENT
Pick the best stocks for yourself
Powered by stockreports
Weekly Top Picks: Eight stocks with consistent score improvement and upside
potential of up to 40%
Weekly Top Picks: Eight stocks with consistent score improvement and upside
potential of up to 40%
9 mins read
4 stocks with 5 % to 8.87% dividend yields and continuous dividend payments for 7
years
4 stocks with 5 % to 8.87% dividend yields and continuous dividend payments for 7
years
7 mins read
Weekly Top Picks: Seven large & mid caps with consistent score improvement and
upside potential of up to 42%
Weekly Top Picks: Seven large & mid caps with consistent score improvement and
upside potential of up to 42%
9 mins read
What do Q2 LIC results indicate for other Insurance companies? Two Life and 3 non-
life Insurance players with �buy� and �strong buy� ratings
What do Q2 LIC results indicate for other Insurance companies? Two Life and 3 non-
life Insurance players with �buy� and �strong buy� ratings
3 mins read
Large cap stocks with upside potential of more than 25%
Large cap stocks with upside potential of more than 25%
4 mins read
5 stocks for a high dividend yielding portfolio
5 stocks for a high dividend yielding portfolio
8 mins read
Eight midcap stocks, 2 with� Strong Buy� and 6 with �Buy� recommendations with
potential upside of up to 35%
Eight midcap stocks, 2 with� Strong Buy� and 6 with �Buy� recommendations with
potential upside of up to 35%
7 mins read
Six high ROE and low PEG ratio stocks, right combination for wealth creation
Six high ROE and low PEG ratio stocks, right combination for wealth creation
8 mins read
View
More Stories
Subscribe to ETPrime
Already a Member? Sign In now
Want complete access to this story?
Subscribe to ETPrime & unlock ePaper, exclusive stories, & smart markets tools.
SUBSCRIBE NOW

VERDICT DAY OFFER

Get flat 20% off on ETPrime

Avail Offer
Exclusive Student Only Offer
What�s Included with

PrimeETPrime Membership

benefit
1
Stock Reports Plus

Buy low & sell high with access to Stock Rating, Upside potential, Analyst
Recommendation and detailed stock reports.

2
benefit
BigBull Portfolio

Get to know where the market gurus invest & discover the opportunities to grow your
portfolio.

benefit
benefit
3
benefit
Stock Analyzer

Evaluate a company based on 31 checkpoints spread across Solvency, Profitability,

Growth, Valuation, Momentum & Risk.

4
ET ePaper -