HUL To Dabur: FMCG Stocks Outperform Benchmark As Brokerages Turn Upbeat

Shares of consumer goods companies extended gains despite the tighter-than-expected outcome of the 2024 Lok Sabha elections, as brokerages turned optimistic following the fourth quarter commentaries.

Emkay Global upgraded the sector to "overweight." Prabhudas Lilladher Financial Services Pvt. anticipates a recovery for companies such as Hindustan Unilever Ltd., Britannia Industries Ltd., Godrej Consumer Products Ltd., Marico Ltd., Dabur India Ltd., Emami Ltd., and Varun Beverages Ltd.

Irrespective of the regime that comes at the centre, sectors such as FMCG, auto, healthcare, IT services, private banks, and capital goods are expected to perform well, Prabhudas Lilladher said.

Geojit Financial Services Ltd. Chief Investment Strategist VK Vijayakumar concurred. Sectors like FMCG, healthcare, and IT will find increasing preferences, and the momentum play slows down, he said.

The surge comes after the pack bucked the market crash on Tuesday, when the Modi-led National Democratic Alliance won the election by a slim margin.

Shares of Britannia, Colgate Palmolive India Ltd., Dabur, Godrej Consumer, Marico, and United Spirits Ltd. were trading at a 52-week high on Wednesday.

Nifty FMCG rose as much as 5.26% during the day, before paring some gains to trade 5.08% higher as of 10:17 a.m. This compares to a 0.67% gain in the benchmark Nifty 50.

Hindustan Unilever led gains, rising 8% intrada, followed by United Spirits, Dabur, and Britannia, which rose over 6%, each, during the day.

Hindustan Unilever shares later pared gains, trading 7.87% higher at Rs 2,692.6 apiece as of 10:26 a.m.

The stock has fallen 0.12% in the last 12 months and has risen 1.3% year-to-date. Total traded volume so far today was 8.8 times its 30-day average. The relative strength index was at 79.

Of the 42 analysts tracking the company, 24 maintain a 'buy' rating on the stock, 12 recommend a 'hold' and six suggest a 'sell', according to Bloomberg data. The average 12-month analyst consensus price targets imply a potential downside of 4.7%.

United Spirits stock rose as much as 7.48% intraday to hit a 52-week high. It pared gains, trading 6.9% higher at Rs 1,287 apiece.

The stock has risen 46% in the last 12 months and 15% year-to-date. Total traded volume so far today was 5.2 times its 30-day average. The relative strength index stood at 69.

Twelve out of the 24 analysts tracking the company have a 'buy' rating on the stock, eight recommend a 'hold' and four suggest a 'sell', according to Bloomberg data. The average 12-month analyst consensus price targets imply a potential downside of 4.5%.