Charts indicate mixed outlook for FMCG majors; HUL, ITC better placed

The FMCG index seems to be exhibiting a negative bias for now; 36,000-level is the key support.

The country's largest fast-moving consumer goods (FMCG) major, Hindustan Unilever posted better than expected performance for the quarter ended December 2021 (Q3FY22) on all fronts - sales, operating profit, and net profit.

The company reported a 18.6 per cent YoY growth in Q3FY22 net profit at Rs 2,297 crore when compared with Rs 1,937 crore in the correponding quarter a year ago. Total income grew 10.3 per cent YoY to Rs 13,439 crore from Rs 12,181 crore.

However, the commentary was worrying because the company management said the operating environment remained challenging as rural growth in volumes for the industry in the December ended quarter (Q3FY22) continued to stay in negative territory, citing Nielsen’s market growth numbers. READ MORE

Meanwhile, here's a trading strategy for FMCG stocks post HUL's Q3 performance:

NIFTY FMCG
Outlook: Current scenario indicates weakness and a negative bias

Since, the early sessions of November 2021 the FMCG index has been seen attempting to hold the support of the 100-day moving average (DMA). However, the selling pressure has had the upper hand over the buying sentiment and the index did not only breach 100-DMA, but also slipped below 36,800-level, which was the 200-DMA. The index did manage to climb above the same, but could not conquer the 39,000 mark, which was the significant hurdle (the 100-DMA). The current price action is below 200-DMA, thus signaling weakness and a negative bias. A breach below 36,000-level can add more downward pressure on the index, as per the daily chart. CLICK HERE FOR THE CHART

ITC Ltd (ITC)
Likely target: Rs 260 (after crossing Rs 230)
Upside potential: 12%

It is a known fact that ITC Ltd exhibits a bullish bias above the support of Rs 205 and Rs 195 levels, as per the weekly chart. The recent weakness has not seen volume supportive decline, reflecting that market participants are not in favor of a negative bias.  The immediate resistance for the stock falls at Rs 230, which if conquered, the sentiment may regain the losing momentum. The positive rally could again see the stock clumb towards Rs 260 level. CLICK HERE FOR THE CHART
 

Hindustan Unilever Ltd (HINDUNILVR)
Likely target: Rs 2,450 (only if Rs 2,300 is held firmly)
Upside potential: 7%

The current daily chart structure reveals a weaker trend with a technical indicator like the Relative Strength Index (RSI) continuing to lose positive strength. That’s said, if the shares of Hindustan Unilever Ltd manage to hold the crucial mark of Rs 2,300 for few more sessions, then the price strength could see a revival towards Rs 2,450 levels, which is its 200-DMA, according to the daily chart. CLICK HERE FOR THE CHART

Dabur India Ltd (DABUR)
Outlook: Weak trend may further see decline

The shares of Dabur India failed to conquer Rs 600 level, its 100-DMA after recovering below the 200-DMA level. This led to a further weakness. The current downside hints at a bearish signal as the Moving Average Convergence Divergence (MACD) formed a negative crossover slipping below the zero line. It reflects a negative direction with momentum favouring the weak sentiment.  CLICK HERE FOR THE CHART

Colgate Palmolive (India) Limited (COLPAL)
Outlook: Indecisive sentiment

The Colgate stock is currently trading sideways and only a decisive move above Rs 1,500 could see breakout levels of Rs 1600 – Rs 1,590, which is its 200-DMA. The immediate support for the stock is positioned at Rs 1,400 level, according to the daily chart. The current chart structure exhibits indecision.  CLICK HERE FOR THE CHART