FMCG stocks in focus after retail inflation drops below 5% in March 2024
Upstox
2 min read • Updated: April 15, 2024, 1:16 PM
Summary
Retail inflation in India stood at 4.85% in March 2024 as compared to 5.09% in February 2024, according to data released by the government. However, rising geo-political tensions following Iran’s direct attack on Israel over the weekend appears to have roiled the markets. Most FMCG stocks were trading in the red on Monday.
Fast moving consumer goods (FMCG) stocks are trading in the red despite the retail inflation figures for March 2024 coming in at a 10-month low. Rising geo-political tensions following Iran’s direct attack on Israel over the weekend appears to have roiled the markets.
On Saturday, Iran had launched hundreds of missiles and drones on Israel in a retaliatory attack, according to a report following a suspected strike by Israel on its consulate in Syria. Iran’s foreign minister Hossein Amirabdollahian had said his country gave neighbouring nations and the United States a notice of 72 hours about the imminent strikes, the report added.
Meanwhile, retail inflation in India stood at 4.85% in March 2024 as compared to 5.09% in February 2024, according to data released by the government. The inflation figure stands within the Reserve Bank of India’s mandated range of 2-6%.
FMCG stocks trade lower
Most FMCG stocks were trading in the red on Monday following the broader trend in the market. Shares of Colgate-Palmolive (India) were trading over 2.5% lower during Monday afternoon session while Hindustan Unilever (HUL) was down 1.7%. Other FMCG stocks like Hindustan Unilever, Dabur and Godrej Consumer Products were all trading lower by at least 1% on Monday. The Nifty FMCG index was down 0.87% during the day.
Lower volumes impact top-line numbers
FMCG companies recently reported lower single digit growth in volumes as demand remains sluggish for FMCG goods across rural and urban areas. Lower inflation numbers may help to revive demand for FMCG goods as well.
Muted returns by FMCG stocks
The year 2024 has not been great for most FMCG stocks. HUL lost over 11% on a year-to-date basis while Britannia Industries and Dabur lost over 11% each during the period. ITC shares are down over 8% since the beginning of the year while Nestle and Marico have lost over 5% each during the period.
Meanwhile, Colgate-Palmolive (India) has registered over 5% gains this year while Godrej Consumer Products has risen over 3%. The Nifty FMCG index has lost over 7% since the beginning of the year. However, in the last one year, it has gained over 14%.