Why Nifty FMCG index is up 10% this year? Top picks here

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Stock market today: After ushering in new year 2022, FMCG stocks have been in ‘uptrend.’ This is mainly due to rise in demand for edible oil and dip in commodity prices after soaring to multi-year high. On chart pattern, Nifty FMCG Index has given fresh breakout at 39,500 levels and it has taken strong support at 40,500 levels.

According to stock market experts, Nifty FMCG Index is currently facing minor hurdle at 41,800 levels. Once the Nifty FMCG Index gives a closing above 41,800, one can expect some sharp upside movement in the index. They said that HUL, Dabur, Tata Consumer and Godrej Consumer Products are some of the FMCG shares that may outperform others in upcoming rally.

Speaking on the reason for rise in Nifty FMCG Index, VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, “An important trend in the market is the strength in FMCGs. The FMCG index is up by 10% this year. This segment is a good defensive play during this turbulence and a major technical advantage for the segment is that FII presence is limited and, therefore, FII selling is not happening.”

On technicals that are fueling FMCG stocks, Sumeet Bagadia, Executive Director at Choice Broking said, “Nifty FMCG Index has recently given breakout at 39,500 levels and it has taken strong base at 40,500 levels. It is facing mild hurdle at 41,800 mark. Once it breaks this hurdle and makes a close above this level, we can expect sharp upside in the index and leading FMCG stocks like HUL, Tata Consumer, Dabur and Godrej Consumer Products.”

On why FMCG stocks are surging, Motilal Oswal says, “Many commodity prices have cooled off 30-40 per cent in recent weeks, thus providing relief to the FMCG sector. Even crude prices fell to below $100/barrel, which if sustains is positive for sectors like Paints, FMCG, Cement, Tyre, Aviation etc. Auto sector stocks have been in momentum on back of softening input costs.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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