Watch FMCG index, consolidation breakout possible

Nifty FMCG index has been trading flat since July 2017 after a sharp fall and a gap-down opening on July 18. One of the reasons being a fall in ITC which accounts for 47.2 per cent of the total Nifty index. ITC had fallen after GST rate on cigarettes was amended with a sharp hike and comparatively higher rates on other FMCG products too brought in some pessimism in other IT giants barring HUL and Britannia. Now FMCG sector seems to be heading towards its recovery amid fading demonetisation and GST roll-out impact. HUL which posted volume growth of 4 per cent in the recent quarter earnings, depicts improvement with wholesale channels too achieving routine.

Moreover, it is expected that Indian would get a salary hike of 10 per cent in 2018, which would be the highest in the entire Asia Pacific region. This would also lead to the highest probable hike in energy, FMCG and retail sectors.

Technically, considering the Nifty FMCG index on daily basis, the stock prices have been still consolidating, but the volumes are seen rising with 14-period RSI and Stochastics double crossover with stochastics bouncing back from the over-sold zone. The index price has a breakout 26150-26175 levels. Currently, the prices are moving at the upper end of consolidation with volumes breakout which may indicate a potential breakout in coming sessions.