Consumption stocks rule charts in NDA rule

MUMBAI:THE consumption theme has dominated top performing sectors on the bourses since the National Democratic Alliance (NDA) government came to power, despite the hurdles of demonetization and early hiccups of the goods and services tax (GST).

While the Sensex rose 41.3% since May 26, 2014, when the NDA came to power, the BSE Consumer Durables Index and BSE Consumer Discretionary Goods and Services Index jumped 161.57% and 104.68%, respectively. The BSE Fast Moving Consumer Goods (FMCG) Index gained 67.39% in the same period.

“Barring the road blocks of demonetization and early issues from GST implementation, there has been genuine growth in connative)

sumption demand, which is why we saw consumer stocks’ profitability growing,” Kotak Mahindra Asset Management Co. managing director Nilesh Shah said.

Shah said in the past six months the quality premium has

aided consumption-linked stocks, as certain bad examples in other sectors and companies helped shift the focus to highquality consumption-linked companies. “Lately, there has also been the TINA (There is no alter- factor,” Shah pointed out. “Investment demand was not picking up, IT and pharma were not picking up. Some investor interest also got diverted away from a few private banks. All this helped consumption stocks gain,” he said.

“We do see a reasonably broadbased pick-up in activity on the ground and it is fairly spread across industries. While most recent headline numbers have been partially boosted by a favourable demonetization impacted base quarter in most cases, even adjusting for demonetisation, there is a pick-up in volumes,” Edelweiss Securities Ltd said in a note dated May 22.

“Indeed, HUL (Hindustan Unilever Ltd) delivered 11% growth on a reasonably high base of 4% in Q4 FY18, indicating a pick-up in demand,” Edelweiss Securities said.