The Hindu Business Line : FMCG stocks back in action

Mumbai May 17 FMCG stocks have been rising steadily on the BSE over the past couple of months with the FMCG index gaining 1.09 per cent at 1858.68 on Thursday. Some six months ago FMCG stocks were down by 9.6 per cent.

Analysts attribute the renewed investor interest in these stocks to the fact that they have not been adversely hit by the recent interest rate hikes. "Till about six months back, interest rates were at a historical low. Therefore, other sectors were looking more attractive. The FMCG sector is a defensive sector that does not get affected by all these rate hikes," said Mr Dharmil Adhyaru, FMCG analyst, Angel Broking. "It is for this reason that many mutual funds are also looking to include FMCG stocks in their portfolio," he added.

Currently, ICICI Prudential, SBI and Franklin Templeton have FMCG funds whose current net asset value stands at 41.78, 14.05 and 34.50, respectively.

The food processing industry is also attracting investors. Given rising incomes, favourable demographics and changing consumption patterns, the growth in demand for processed foods is inevitable and the industry is expected to reach Rs 13.50 lakh crore in 2015 from the current Rs 4.60 lakh crore . In the process, the industry will attract over Rs 1,00,000 crore in investments across all segments of the value chain, from agri inputs to logistics to front end infrastructure and distribution, said a research report from SSKI.

Nestle Ltd fell 2.71 per cent on Thursday but has gained 9.51 per cent month-on-month.

Biscuits companies are looking to gain as well as the Finance Minister, Mr P. Chidambaram, had in the Budget proposed excise duty exemption for biscuits selling at Rs 50 per kg or less. The stock of Britannia has risen 12.86 per cent month-on-month to close at Rs 1,435.30, while the stock of ITC Ltd has shown an increase of 5.73 per cent month-on-month. "The Budget effect comes in from April onwards and the benefits will flow from now," said an analyst from Religare.

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