At 12:45 pm, Nifty FMCG
index was up 4.3 per cent, as compared to 3.7 per cent rise in the Nifty50 index.
Among individual stocks, Nestle India
rallied 5 per cent to Rs 16,425 in intra-day trade. The stock is 2.5 per cent away from its all-time high level of Rs 16,835, touched on March 5, 2020. HUL gained 4 per cent to Rs 2,270, which is less than 2 per cent away from its record high level of Rs 2,308, hit on February 19, 2020.
While the Covid-19 pandemic will put the economic recovery under stress which in turn pushes back overall consumption revival in the very near term, the government’s relief package of Rs 1.7 trillion under the Pradhan Mantri Garib Kalyan Scheme should give some relief.
Analysts at JP Morgan expect staples to be relatively more resilient – Nestle India
and HUL are preferred picks, benefiting from higher sales of packaged foods, home care/hygiene/personal care products in their portfolio.
“In terms of key input prices, crude has corrected sharply and the rest of the basket remains largely benign, which augurs well for earnings growth. From a recommendation perspective, we remain optimistic on Consumer Staple companies as they are still a safer bet at this point in time. We continue to remain positive on HUL, Britannia Industries and Marico and also upgrade Dabur India and Colgate-Palmolive India to Buy from Accumulate rating earlier,” analysts at Nirmal Bang Equities said in consumer sector update.
“We see comparatively less impact on overall FMCG business as few categories would witness demand boost but closure of malls and less travelling would have negative impact. We believe that the companies like HUL, Britannia would not have major negative impact given the dominance of the traditional distribution channels,” analysts at Dolat Capital said in sector update.
The brokerage firm maintains positive stance on Dabur and HUL. Due to a diversified portfolio and continuous gain in market share compared to peers, the brokerage recommends utilizing the sharp corrections in these stocks as an accumulate opportunity.