Shares of fast-moving consumer goods companies (FMCG) gained on Tuesday, with Nestlé India and Hindustan Unilever (HUL) rallying up to 5% in intraday trade, analysts seeing limited impact in the sector due to the COVID-19 epidemic. These two stocks are trading near their respective record levels on the National Stock Exchange (NSE).
In addition, Britannia Industries, Dabur India, ITC and Emami of the Nifty FMCG index also gained more than 5% each, while Tata Consumer Products, Colgate Palmolive (India), Marico and Godrej Consumer Products (GCPL) were in rise in the range. 3 to 5 percent on the NSE.
At 12:45 p.m., the Nifty FMCG index was up 4.3%, compared to a 3.7% increase in the Nifty50 index.
Among individual stocks, Nestlé India rose 5% to reach 16,425 rupees in intraday trading. The stock is 2.5% from its record level of 16,835 rupees, hit on March 5, 2020. HUL gained 4% to 2,270 rupees, less than 2% of its record level of 2,308 rupees. , struck on February 19, 2020.
While the Covid-19 pandemic will put the economic recovery under pressure, which in turn will postpone the global recovery in consumption in the very short term, the government’s 1.7 billion rupee rescue package under the program Pradhan Mantri Garib Kalyan should bring some relief.
JP Morgan analysts expect staple foods to be relatively more resilient – Nestlé India and HUL are the preferred choices, benefiting from higher sales of packaged food, home care / hygiene products / of personal care in their portfolio.
“In terms of key input prices, crude oil has corrected sharply and the rest of the basket remains largely benign, which bodes well for earnings growth. From the point of view of the recommendations, we remain optimistic vis-à-vis the basic consumer societies, because they are always a safer bet today. We continue to stay positive on HUL, Britannia Industries and Marico and are also improving Dabur India and Colgate-Palmolive India to buy from the Accumulate note earlier, “analysts at Nirmal Bang Equities said in a sector update. the consumption.
“We see a relatively smaller impact on all mass consumption activities, since few categories would see an increase in demand, but the closure of shopping centers and fewer trips would have a negative impact. We believe that companies like HUL and Britannia would not have a major negative impact given the dominance of traditional distribution channels, “said analysts at Dolat Capital in an industry update.
The brokerage firm maintains a positive position on Dabur and HUL. Due to a diversified portfolio and a continuous gain in market share compared to its peers, the brokerage recommends using the strong corrections of these stocks as an opportunity to seize.