What makes Nifty FMCG look strong on charts?

ET Intelligence Group: The underperformance of Nifty FMCG index may narrow compared with the benchmark Nifty 50 in the next three months, if history is any guide. The sector index representing consumer staple stocks declined in each of the past three months, a rare phenomenon which has occurred only four times in 10 years.The historical data suggest that if the Nifty FMCG index retracts for three months in a row, it earns return in each of the next three months. In such cases, the cumulative average return was around 10% with maximum return of 12.3% and on the minimum side, a loss of 2.7%."Based on the historical observations, we have suggested a long recommendation on the FMCG index with a target of 32, 800 with a stop loss of 27, 590," said Neeraj Agarwal, Vice-President at Antique Broking. On Monday, the index was at 30,453.The Nifty FMCG index lost 4.5% in the past three months, while the Nifty 50 gained 9.3% following the portfolio churn by the investors to growth stock from the defensives.After the recent underperformance, the valuation difference between the Nifty FMCG index and Nifty 50 has narrowed to 13%, compared with 33% at the beginning of the year. The Nifty FMCG index trades at 37 times of historical earnings compared with 33 times for the Nifty 50, according to NSE data.The staples heavyweights HUL (weight of 29%), ITC (23%), Nestle (9.8%) and Britannia (6.7%) have two-third weight in the Nifty FMCG index. Market observers anticipate an increase in the weights of Nestle India, Britannia, Tata Consumer and Colgate-Palmolive during the semi-annual review of the MSCI index. This may further support these stocks.

from Economic Times https://bit.ly/2UaHFD2
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