Shares of fast-moving consumer goods companies (FMCG) rose up to 8% on the National Stock Exchange (NSE) on Thursday after Finance Minister Nirmala Sitharama announced an economic package to deal with the impact of Covid-19.
The government would provide a 1.7 trillion rupee relief package under the Pradhan Mantri Garib Kalyan program to disadvantaged, poor and migrant workers hit by a deadlock in the midst of the Covid-19 crisis.
Among individual stocks, Marico and Godrej Consumer Products rose 8%, while ITC, Hindustan Unilever, Emami, Dabur India, Colgate Palmolive (India) and Birtannia Industries rose 5 to 7%. percent on the NSE.
At 2:45 p.m., the Nifty FMCG index was up 5%, rebounding 6% from the intraday low of the NSE. In comparison, the benchmark Nifty 50 rose 3.6% to 8,617 points.
Crisil Ratings says expected recovery in rural demand, combined with sustained urban demand, should bring FMCG sector revenue growth from Rs.4 trillion to 10-11 percent in fiscal year 2021, near levels observed during the 2019 financial year.
This tax, sales of FMCG products were affected by the slowdown in rural demand and the liquidity squeeze that affected the wholesale circuits. Rural demand, which accounts for just under half of the sector’s revenues, has slowed considerably in the first half of the current budget period, following the decline in agricultural production and the moderation of agricultural GDP in 2%.
Rural demand is expected to gradually recover from March to April 2020, taking advantage of increased farm incomes. Given better storage levels in reservoirs (40% higher than the long-term average on January 16, 2020) after a good monsoon, better production of rabi (increase of 7 to 8% year-on-year) and good visibility for the next harvest seasons, said Crisil Ratings in a recent consumer product sector update.
First published: Thu 26 March 2020. 14:51 IST
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