Nifty FMCG gains nearly 2% despite the profit-booking on Friday!

Nifty FMCG emerged as one of the top supporters of the broader market and gained about 1.84% at the end of the day.

Along with Nifty Auto, Nifty FMCG traded higher throughout the day and supported the market from collapsing further. Hindustan Unilever Limited (2.59%) and ITC (2.25%) emerged as two of the top five gainers among the Nifty stocks.

For the past few weeks, Nifty FMCG has been resilient to market fluctuations. Highly regarded as the defensive sector, it has been able to preserve investors’ wealth in these turbulent times. The index has generated about flat returns in the past six weeks, whereas all the other indices have seen major profit booking. On the technical chart, the index trades above its 50-DMA and 100-DMA but is below its 20-DMA and 200-DMA by about 2% and 3%, respectively.

The index has given a breakdown from its double top pattern recently, which is a sign of bearishness. However, it has managed to recover sharply from the low and had surged past its breakdown level. The technical indicators indicate a neutral to bullish view of the index. The 14-period daily RSI (46.21) has crossed above its prior swing high and indicates improving strength. The Elder Impulse System has a neutral view, while TSI and KST indicators have indicated an improvement. MACD line and the signal line are converging, suggesting a fizzled-out downtrend.

On a YTD basis, the index has fallen about negative 1% which is far less than the negative 9% of Nifty. Technically, it is expected to trade in a sideways zone with likely breakouts placed at 35826 level and 37779 level. A fall below the prior swing low of 35826 shall be detrimental, whereas a rise above the 200-DMA level of 37779 can bring positivity to the index. FMCG stocks have shown good strength recently and investors can continue holding the stocks with their appropriate stop loss.