Consumer Goods Stocks Are Breaking Out!

JC Parets
July 9, 2018

For months we've been focusing our long efforts on stocks in sectors like Fast Moving Consumer Goods that have been showing relative strength. Today we're revisiting the Consumer Goods sector as it makes new all-time highs on an absolute basis and nearly 1-year highs relative to the Nifty 500 to see what names we want to be involved in to capitalize on this theme.

Click on chart to enlarge view.

Here is a look at the Nifty Fast Moving Consumer Goods Index on an absolute basis, showing prices marching toward our price target of 30,710 after two months of consolidation.

Here is a list of Consumer Goods stocks we want to be buying. You'll notice that many of them have been discussed in our posts before, but are listed here because they continue to show relative strength and well-defined reward/risk opportunities.

Asian Paints is the first name on our list. We want to be buying all weakness in this stock as long as it's above 1,227 and taking profits near 1,460.

Bata India Ltd. is nearing our first price target of 896. Once that target is reached it becomes our new risk management level, meaning we only want to be long above it, with a secondary price target of 1,203.

Bombay Burmah Trading Corporation is a name we want to be watching. If we get an upside resolution of the stock's year-long range by closing above 1,695, we want to be long and taking profits near 2,550.

Berger Paints looks similar to Asian Paints in that it broke out, retested the breakout level, and then continued higher. As long as prices are above 277 we want to be long and taking profits near 338.50.

Britannia Industries is in an extremely strong uptrend and hitting all-time highs. We want to be buying weakness in this stock as long as prices are above 5,900 and taking profits near 6,840.

Dabur India Ltd. is at risk of putting in a failed breakout by closing back below the January highs. As long as prices are above 365 we want to be long and taking profits near 455, but if prices close below it then a neutral stance is best.

Avenue Supermarts Ltd. continues to trade between our risk management level of 1,430 and price target of 1,660. As long as prices are above 1,430 we want to be buying weakness and taking profits at our first price target at which point we'll reevaluate since our secondary price target is near 2,030.

Goodrej Consumer Products Ltd. is breaking out to new all-time highs. If prices are above 1,220 we want to be long and taking profits near 1,440.

We want to be watching for a close above 558 in Havells India Ltd. to confirm a breakout that will target 715.

Marico Ltd. is trading just under all-time highs. We want to be buying a breakout above 352 and taking profits near 424.

Parag Milk Foods is another name we want to watch for a breakout. If prices can close above 357 we want to be long and taking profits near 452.

Procter & Gamble Hygiene & Health Care continues to consolidate near all-time highs. We want to be long the stock if prices are above the December highs of 9,880 and taking profits at 11,110.

United Breweries Ltd. failed to break out in June, but looks to be setting up for another attempt. We want to be buying a close above 1,225 and taking profits near 1,550.

The Bottom Line: We continue to in an environment where we need to be selective regarding our longs and shorts, as discussed in our market breadth post. The Fast Moving Consumer Goods Index has shown resilience during the recent market correction and is now making new highs on an absolute and relative basis. The setups listed above are those in the sector with the most well-defined risk and best reward/risk ratios, so that if we're wrong, we're wrong small, and if we're right, we're compensated accordingly.

Thanks for reading and please let us know if you have any questions.

Allstarcharts Team

Filed Under