FMCG Hungry for More

JC Parets
August 27, 2021

The FMCG sector had hit the snooze button and was in a nice slumber until recently. With the index making a new all-time high and stocks moving up above their resistances, this is a good time to take a look at FMCG.

We've been absolutely clear from the beginning that in a messy market environment, one has to be careful with regards to their investments.

What we also know, is that FMCG is a defensive sector and tends to lead the market when the sentiment isn't in the most positive territory.

So let's take a look at the stocks which are making the cut in the current market scenario.

How about being clear about our levels in the sector first?

Here's the sector chart that we're tracking at the moment. On the weekly timeframe, we're observing an overhead target above 39,600. This is the 161.8% Fibonacci extension of the October 2018 highs to December 2020 lows move.

What's left to see is if this trend continues along - above its immediate resistance - with the strong momentum that we're witnessing at present.

Click on the chart to zoom in.

The following are the stocks that we're tracking in the current move:

Hindustan Unilever

The price has finally managed to move past its 2020 resistance of 2,430. Notice how the 2020 resistance is being taken out now, while most stocks in other sectors are trading at much higher levels compared to the pre-covid levels!

What's nice to see is a strong bullish candlestick breakout. You can see visually how the overhead supply has been absorbed at this level.

With this move, the price has moved out of the ascending triangle pattern that has been underway for over a year now. The target to track would now be 2,960.

We are bullish as long as the price trades above the risk management level of 2,430.

Nestle India Ltd.

Nestle has been range-bound for more than a year now. With the price breaking out above the resistance of 18,700, we can finally make a positive case for this stock.

This move is backed by momentum as can be seen by the placement of the indicator.

We are bullish above the level of 18,700 with a target near 22,280.

Godrej Consumer Products

Godrej Consumer Products has been on our radar for a while. And rightly so, look at that base breakout!

We have a massive three-year base breakout in the stock here. Of course, this is accompanied by a strong move in momentum as well. You know just how much we love smiley faces, and this is a perfect example of one!

Acknowledgment of resistance at 978, a minor sideways move, followed by a clean breakout. All this, with bullish momentum. All that's left to see is the follow-through.

We are positive above the level of 978 with a target near 1,320.

Avenue Supermarts

Up next is a crowd favourite. Avenue Supermarts has been a super performer over the past year. An absolute outperformer in this space, DMART has been moving from strength to strength.

With the breakout above 3,475, the price is now poised for the next leg of the rally. The target to track is 4,925.

Notice how the momentum is agreeing with the current market setup.

Tata Consumer Products Ltd.

Tata Consumer Products is another name that must be included in the stocks outperforming in the FMCG sector.

Just look at that sharp rally! The price recovered very early last year and hasn't looked back. With the overhead resistance of 820 being taken out, this stock looks ready for a fresh move up north.

The indicator is comfortably placed in the bullish momentum territory and is aligned with the price move.

We are bullish above the level of 820 with a target near 1,215.

The market is such that at different points we witness leadership from a variety of groups. In the current market mess, FMCG is taking its responsibility seriously and is showing strength.

In such times we like to look for outperformers and cut out the underperformers. We can continue to hold on to stocks for sentimental value, but that will only increase failed trades and decrease the portfolio value.

Thank you for reading. If you have any questions, please let us know.

Allstarcharts Team

Filed Under: