The shares of FMCG companies recorded strong losses on May 27, as investors resorted to profit booking after significant rally. The sharp rise in the share prices pushed the Nifty FMCG index down over 1.3 percent to emerge as the top sectoral loser.
ITC shares were the top loser on the index, dropping nearly 2 percent to trade at Rs 434.70 apiece, while United Breweries shares plunged 1.4 percent. Heavyweight Hindustan Unilever (HUL) declined nearly 0.5 percent to trade at Rs 2,383 apiece.
Godrej Consumer Products, Britannia Industries, Patanjali Foods and Tata Consumer Products shares were trading in the red with marginal losses.
Bucking the trend, Varun Beverages, Dabur India, Marico, Colgate Palmolive and Nestle shares closed in the green, recording marginal gains for their investors.
Notably, the FMCG stocks have seen significant volatility recently. The index surged nearly 2,000 points (over 2.6 percent) in the past two sessions. This comes as monsoon hit several parts of the country, arriving nearly eight days ahead of schedule, the earliest in 16 years. This is likely to boost consumption, and as a result gave a boost to FMCG stocks.
"Fertilizer, Agrochemical, FMCG, Auto and rural finance sectors would remain in focus due to the early onset of the monsoon and forecasts of above-average rainfall," said Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services.
The government expects above normal monsoon conditions to provide a significant boost to consumption and productivity in the upcoming financial year, senior government sources said on May 23. "With good or above-normal monsoon, productivity and consumption will grow. Funds in consumption-related sectors are at a high. All these add up, showing the economy is fine," a government source told Moneycontrol.
The earlier rise in the share prices was also buoyed by positive earnings. ITC on May 22 had reported a net profit Rs 19,562 crore for the fourth quarter of FY25. This however included a one-time exceptional item of Rs 15,179 crore from discontinued operations. It also reported revenue from operations at Rs 18,494 crore, higher than the Rs 17,371 crore revenue estimated on an average by nine brokerages polled by Moneycontrol.
The shares strongly surged over the two days. However, the latest fall in the share prices may come as investors resort to profit booking ay elevated prices.
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