Avoid buying FMCG stocks at current levels: Mehta

Avoid buying FMCG stocks at current levels, says Dipan Mehta, Member- BSE & NSE.

Mehta told CNBC-TV18, “We are trying to try and make a steady exit from the FMCG stocks and the best strategy would be to sell at every rally and try and gradually reduce the position, no sharp moves in terms of trading or investment. And try and change the complexion of the portfolio from defensives into the more aggressive may be the interest rate sensitive, some of the cyclicals because clearly the market has turned and may be it does seem the economy also would have turned the corner and you would see better growth rate going forward may be even corporate profits if you look 6-12 months down the line could show an improvement.”
He further added, “It only makes sense to try and change the weightages in the portfolio to make it little bit more aggressive and may be FMCG has been fantastic over the past two years and helped a lot of fund managers, investors outperform or at least protect their capital. But I think they have played their role and now although they are great companies, I think in terms of valuation and PEG ratios and all the other various analysis tools that one applies, they certainly are on the expensive side and although the earnings growth may remain steady, it is just that they have priced themselves out for the time being. So at least the best strategy would be to try and liquidate little bit or may be just hold them for a longer period, certainly not get into buying these stocks at these levels.”