Sector found safe as IT guidances go kaput
Fast moving consumer goods (FMCG) stocks have been rallying since the beginning of April.
Analysts attribute the increased buying interest in these stocks to good monsoon forecast. Also, the poor guidance from software companies has worked in favour of FMCG stocks.
According to market sources, following the weaker-than-expected performance of the software sector in the latest quarter to March 2003, investors are beginning to perceive old economy counters such as FMCG as a safe bet.
FMCG stocks such as Nirma, McDowell, ITC, Pidilite, Marico, Dabur India and Procter & Gamble have clocked smart gains.
These stocks have seen gains ranging between two per cent and 39 per cent between April 1, 2003, and May 20.
Hindustan Lever Ltd (HLL) was among the losers. Some of the distinct reasons for the overall rally in FMCG stocks are the renewed buying by institutions, forecast of good monsoon, expectation of good results, attractive valuations and high dividend yield plays.
Preeti Manerkar, an analyst tracking the FMCG sector at HDFC Securities, said,
