Shares of Hindustan Unilever, Godrej Consumer Products and Britannia Industries surged in trade on July 6 as global crude palm oil prices continued to sink.
Crude palm oil futures on international exchanges have nosedived more than 35 percent in the past few weeks on the back of resumption of exports from Indonesia as well as concerns over global demand.
Palm oil prices are currently trading near their six-month lows owing to high inventory in the Indonesian market and key consumers like India and Pakistan delaying imports, according to a Hindu BusinessLine report.
The sharp decline in prices of crude palm oil is positive for domestic fast-moving consumers goods manufacturers as it is a critical raw material.
Earlier in the year, a surge in palm oil prices in the wake of Russia-Ukraine war and Indonesia’s impromptu export ban had triggered a sharp decline in most FMCG stocks as investors feared worsening of input price inflation that has affected these companies over the past year.
“We are enthused by this deflation but need to see its sustainability; geopolitical risks remain a key monitorable,” brokerage firm Edelweiss Securities had said in a recent note.
Analysts, however, expect the impact of lower palm oil prices to only reflect from the third quarter as the first two quarters of the current financial year will bear most of the burden of higher input costs.
At 10:35 am, shares of HUL, Godrej Consumer and Britannia were up 1.5-2.2 percent on the National Stock Exchange. Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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