FMCG shares closed higher on Friday.
New Delhi. A good rise was seen in the shares of FMCG sector in the stock market on Friday and Nifty FMCG Index closed with a gain of more than 2 percent. The special thing is that shares like Hindustan Unilever (HUL Share), Dabur (Dabur Share) and ITC showed good growth. ITC was the top gainer in the sector with a gain of 5 percent. HUL stock showed a rise of about 3 percent. The special thing is that the shares of HUL and Dabur have closed above 200 DMA, which is considered good for the rise in any stock on technical basis.
The question is whether FMCG shares, which have been facing recession for 16 months, are now gaining momentum and should one bet on the shares of this sector. Jagran Business sought opinion from market experts on this question.
Why the boom in FMCG sector?
Wealth manager and independent market expert, Abhishek Bhatt said, possible relief related to GST is considered to be the main reason behind the rise in shares of FMCG sector. There are indications of simplification of tax structure on packaged food and household items and removal of ambiguities related to input tax credit, which may ease the pressure on margins of FMCG companies.
Along with this, there is hope of improvement in consumption due to the indications of increasing rural expenditure and continuation of income support schemes in the Union Budget. FMCG companies get the direct benefit of improving rural demand, because their major sales come from there. Another important reason is the stability in the cost of raw materials. There is currently no sharp rise in the prices of palm oil, packaging material and crude based inputs, due to which the margins of the companies may remain better in the coming quarters.
Due to all these reasons, investors turned towards the defensive sector, the direct effect of which was seen in the form of rapid buying in FMCG shares.
Target on shares of HUL and Dabur
Hindustan Unilever is the largest company in the FMCG sector. HUL shares witnessed a mild rise in the recent sessions and stood above Rs 2,400. According to the technical charts, the area of Rs 2,260–2,300 is considered an important support zone, while above it, strong resistance is seen between Rs 2,370–2,480. The next big trend could be decided on a sustainable breakout above or below these levels.
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At the same time, the share of Dabur India is currently stuck in a technically limited range. Charts indicate that there is important support around Rs 488-490 and Rs 480, while above Rs 525 and Rs 552 levels are emerging as key resistance. The new direction of the stock will be clear only after a decisive breakout from the range of Rs 480–525.
(Disclaimer: The information given here regarding IPO is not an investment opinion. Since investing in the stock market is subject to market risks, please consult a certified investment advisor before investing.)
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