Will FCMG, realty, auto stocks benefit from festive demand? Ajay Bagga answers
Synopsis
"The global macro is the predominant moving factor and that stays till December 13th at the least; till we get some clarity on the Fed's next move. For some time, you will see rangebound markets. Optimistically, hopefully, by Diwali, we cross a lifetime high on Nifty, but then it comes back down. There are no very strong fundamentals to hold it there and sentiment is quite bearish."
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Festive cheer will begin next week after seeing an inauspicious period. We have seen sectors like FMCG, real estate, and auto benefitting from the festive demand. Are they still looking attractive?
Well, we will have to wait and watch. This time what has happened is that the premium segments have done much better. Two-wheelers have not yet picked up, while the passenger vehicles have seen an upsurge; MUVs, and SUVs are selling much more. Staples have not done so well and durables have not yet picked up. A lot of anticipation will not come in this year's earnings. We will only get to know around January what has happened. Again, with the monsoon not being that great, a lot will depend on a month from now as to what the quality of the crops are, what are the trends etc.
The rural demand will matter. The good thing is with five big states, there will be expenditure going into the rural voters' pockets. And with the national election coming in, a lot more welfare measures will start. As we have seen, petrol and diesel prices have not been hiked for one and a half years and cooking gas prices have been cut.
The big factor will be to try to put more purchasing power into the domestic consumers' pockets. So ideally, FMCG and durables, electronics, and two-wheelers tend to do well going into the elections. They should pick up over the next three months. For now, I would wait and watch. The global macro is the predominant moving factor and that stays till December 13th at the least; till we get some clarity on the Fed's next move. For some time, you will see rangebound markets. Optimistically, hopefully, by Diwali, we cross a lifetime high on Nifty, but then it comes back down. There are no very strong fundamentals to hold it there and sentiment is quite bearish. So that is the trouble. Sector-wise, FMCG will not see very great numbers for the quarter.