Insights

FMCG Stocks: Time To Include In Portfolio

July 18, 2012 . FundsIndia Desk

The stocks from the fast moving consumer goods (FMCG) space have been in a consolidation phase. This represents an opportunity to buy them for a quick 10-15% gains from a short-term perspective. We recommend a buy on Colgate Palmolive, Dabur India and Marico Industries.

Have a look at the daily chart of Colgate featured below. The stock has corrected from the recent high of Rs.1,250 and has taken support at the green centreline.

We expect a bounce back to the recent highs, to begin with. A breakout past Rs.1,250 could open up higher targets. But, let’s not get too fancy here. Watch this space for updates once the first target is taken out. The stop-loss of long positions may be placed at Rs.1,080.

The next stock in our list is Dabur India. This stock too seems to have completed its correction and appears set to resume the uptrend.  Kindly direct your attention to the daily chart featured below.

The stock has registered a breakout past the crucial resistance at Rs.112-114 range and could head to the next resistance at Rs.130. Buy the stock with a stop loss at Rs.109, for a target of Rs.130. A breakout past Rs.130 could trigger a rally to the next target of Rs.140.

The other stock in our radar is Marico Industries, which is more popular for its Parachute and Saffola brands. The stock is in a sideways consolidation now and a breakout past Rs.188 could trigger a rally to Rs.210.

Buy Marico with a stop loss at Rs.169, for a short-term target of Rs.210. A move past the initial resistance at Rs.210 could trigger a rally to the next major target of Rs.230.

The risk-reward (based on the first target) in the trades featured here may be less than 1:1, which is not acceptable in the normal scheme of things. But, we still recommend these trade owing to the higher probability of success and the expectation of a bigger move and a higher targets. And, the risk can always be collapsed to more acceptable levels once the price makes a move in our favour.

Trade Safe and Don’t get hurt..

Cheers

B.Krishnakumar

(Disclaimer: Please note that the above recommendation is based on the Technical Analysis of historical stock price action and not based on Fundamentals. There is a risk of loss in trading and always trade with a stop loss. We may have recommended these stocks to our clients. Neither the author nor FundsIndia.com or its directors have any financial or other interest in the stocks discussed in this post.)

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