Sensex extends losing streak, even as FMCG stocks rise

As the main indices fell today, the share prices of fast moving consumer goods (FMCG) companies rose.

The Bombay Stock Exchange (BSE) FMGC index gained 2.5 per cent in the three trading sessions since Thursday even as the benchmark BSE Sensex developed cracks and fell 1.59 per cent during the period.

The BSE FMCG index had underperformed the broad market over the past month. It had fallen 0.17 per cent as compared to the rise of 2.71 per cent for the Sensex.
 

A STEP AHEAD
Index	Jan 21,’10	Jan 25, ’10	% Chg
BSE FMCG	2735.41	2803.73	2.50
BSE IT Index	5274.34	5121.76	2.89
BSE Realty	3820.93	3648.15	-4.52
BSE Bankex	9965.73	9702.73	-2.64
BSE Sensex	17051.14	16780.46	-1.59

“During a crisis, when central banks suck liquidity, food inflation tends to be higher. So, FMCG stocks are contra-theme and have gained ground when all other sectors are under pressure,” said Ajay Pandey, assistant vice-president, equities, Intime Spectrum Securities.

ITC was the top gainer in the past three trading sessions in the FMCG index. Its share was up 4.38 per cent. During the period, Hindustan Unilever was up 2.75 per cent. ITC closed at Rs 254.85, up 2.2 pre cent, and HUL rose 2.35 per cent to Rs 263.85. Both stocks together accounted for nearly 70 per cent of the BSE FMCG index in terms of weightage.

Market experts said FMCG stocks were perceived to be defensive stocks and a safe haven for investors. The markets developed cracks last week after China tightened its monetary policy. Global markets were trading weak as China’s move could be an indication that a liquidity bubble was building in their economy.

Analysts said the characteristic of the FMCG business was that it relied on domestic consumption while most other sectors were linked to global cues in some way.