Major FMCG comp.es and their shares appear to be on the rise, after a slump, that was noted on the first day of the trading week on Monday, 7 May. While Sensex opened flat on 7 May, marquee FMCG and consumer product players including Hindustan Unilever, ITC Nestle India, Marico, Dabur and Brit.a are trading in green with tangible gains in the early hours of the trading session on 7 May.
Shares of FMCGs Jump
This surge is being attributed to an ostensible recovery in demand, and by extension, the prospects of growth in the sector. Here, according to reports, after eluding uncertainties, the rural demand for FMCG and other consumer products appear to be on the path to recovery.
Amongst these large cap entities, Mumbai-based Marico is the biggest gainer so far, with a surge of over 8 per cent. This is followed by Dabur with a 5.02 per cent gain. Then comes another Mumbai-based entity, Hindustan Unilever, with 2.53 per cent surge. The list of gainers also accommodates others, including Kolkata-based ITC and Nestle, which has been recently embroiled in much controversy.
One of the reasons attributed to this apparent surge by some analysts is the clearing of uncertainty over production and supply chain issues, coupled with the anticipation of a normal monsoon, which is aiding the hope for better production, thereby aiding consumption of products, that are not marred by inflation.
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Consumption On Recovery Path
This also comes at a time, when the indices in the larger picture are having an uneventful day so far.
For context, Nestle found itself in another controversy surrounding its allegedly inferior products, this time with Cerelac, a product, marketed for consumption of infants, that has been under the radar for allegedly high amount of sugar in it.
One of the reasons attributed to this apparent surge by some analysts is the clearing of uncertainty over production and supply chain issues, coupled with the anticipation of a normal monsoon, which is aiding the hope for better production, thereby aiding consumption of products, that are not marred by inflation.
It is to be noted that monsoons, and most importantly, a ‘good’ monsoon, plays a significant role in eluding turbulence in agricultural production, as the Indian agricultural horizon, heavily depends and therefore is dictated by the nature phenomenon, in the dearth of an adequate irrigation system throughout the country.
In addition, the central government’s protectionist measures, including the proscribing of certain items, including broken rice, may have also aided the wave of optimism for the markets.
