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Kolkata , Dec. 16

THE stocks of fast moving consumer goods companies are on the move. During the current eight-month long rally, these stocks have occasionally been off the shelves. But during the last five trading sessions on the Bombay Stock Exchange, the FMCG Index has risen by 4.2 per cent, outpacing the Sensex, which moved up by 2.87 per cent.

According to dealers, a section of FIIs, mutual funds, and portfolio management schemes of large broking outfits have been buying the top stocks of the sectors such as ITC, Hindustan Lever and Dabur as defence bets.

"A combination of tactical factors, rather than technical or fundamental ones, is at play in these three counters. For example, fund houses, brokerages and institutions with large exposures outside the top index stocks are shifting or buying into these three to hedge their risks in the volatile counters," said a dealer of an brokerage firm of an institution.

These three stocks are also in demand for stock lending. "Players with deep pockets also prefer to stay close to the steering wheel of the key indices as weightage of ITC and HLL is significant", said a BSE broker.

Fundamentally, the market considers these stocks as safe bets in terms of yield. The market expects an average dividend yield of 22 per cent from the FMCG stocks in general, up from the current average of 16.5 per cent.

According to Ms Priya Madani of Anagram Stockbroking, ITC is considered safest among the lot. "The company has already made enough provision for the disputed excise claims. . On the other hand, its non-tobacco businesses and subsidiaries are showing signs of improvement by the quarters". The stock gained over Rs 124 in last seven sessions.

The HLL stock has gone up by 6.1 per cent in the past five sessions. Apart from a better result, the market is expecting some serious restructuring from the company. "It has already shifted from a margin game to volume game. However, many of its brands and distribution strategy require re-look. The results of parallel multi-level marketing strategy for the same products, which are sold through its traditional distribution channels, are yet to be seen", Mr Nikhil Thacker of Ashit C Mehta Investment Intermediaries said.

Dabur has gained around 15 per cent in the last seven sessions.

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