Nifty FMCG Index It is trading close to its all-time high of 48,700. This is mostly due to its highest weightage component, ITC, which reaches its highest level every day.
ITC, with a weightage of 38% in the FMCG index, significantly influences its performance.
as one of biggest fmcg companies in indiaITC’s strong financial performance and market dominance have made it a major player in the industry.
The company’s diverse product portfolio includes popular brands like Ashirwad, Sunfeast and Bingo! It has been made the market leader.
In recent years, ITC has also made significant strides in sustainability and corporate social responsibility, further enhancing its reputation and appeal among investors.
As long as ITC continues to deliver a strong performance, it is likely that the FMCG index will be buoyed by its weightage in the coming months.
Nestle and Radico are the other stocks in the basket that have managed to grow by double digits in 2023.
We are seeing divergence in stock performance of FMCG index.
When such divergences occur, it is important for investors to do in-depth research and understand the underlying reasons and make informed decisions.
In some cases, it may be wise to invest in individual stocks within an index, rather than the index as a whole, to capture the potential gains of the outperforming stocks.
However, investors should also be aware of the potential risks and volatility associated with investing in individual stocks.
The market breadth or advance-decline ratio of the FMCG index on a weekly closing basis is 60%, ie 9 out of 15 stocks in the FMCG index.
The advance-decline ratio is a measure used to assess overall market sentiment and direction. It is calculated by dividing the number of stocks that have increased in price (advancing stock) by the number of stocks that have decreased in price (declining stock) over a period of time.
The resulting ratio can range from 0 to 1, with a value of 0.5 or greater than 50% indicating that advancing stocks outnumber falling stocks, and a value of 0.5 or less than 50% indicating the opposite.
the chart speaks for itself
The FMCG index was one of the better performing indices in the Indian markets with a gain of 17%.
The index leader, ITC, closed 2022 with a gain of 59% near its all-time high. The subsequent bullish momentum lengthened to 2023.
On the weekly chart, the index has broken out of its 18-week range as the previous high of 46,331-46,398 acted as a resistance zone.
A breakout of 52-week high in early April 2023 indicated resumption of the index’s bullish trend.
A breakout of a 52-week high is often viewed as a bullish sign by traders and investors as it suggests that the stock has significant positive momentum and could potentially continue to rise in price.
The recent breakout indicates that the bulls are in control of the momentum and ITC will continue to lead the index.
Before investing in an index, investors and traders should understand the risks involved in the performance of the stocks in the index.
Disclaimer: This article is for information purposes only. This is not a stock recommendation and should not be treated as such.
This article is syndicated equitymaster.com
Know your inner investor
Do you have guts of steel or are you a victim of insomnia regarding your investments? Let’s define your investment approach.
catch all business News, market news, today’s fresh news events and Breaking News Update on Live Mint. download mint news app To get daily market updates.