Stock market watch: What to expect from the week ending June 4, 2021

With the Sensex and Nifty hitting new 52-week highs on 28 May, the bullish fervour in the market is increasing . “Technical charts are still looking bullish and Nifty is heading to 16,400 in 2-3 months,” says Mehul Kothari, AVP -Technical Research, Anand Rathi. Very short-term players need to be wary. “The FIIs’ long – short ratio is now around 88%, almost a 5-year high. There may be a healthy correction before achieving new targets,” says Kothari.

Mid- and small-cap segments have outperformed in the past three months. “Mid and small caps outperform during periods of market consolidation. As the sentiments remain bullish, buying shifts from heavyweight to broader market,” says Kothari. Will this trend reverse as Nifty is at an all-time high? On 28 May, Nifty Midcap 150 and Smallcap 250 fell by 0.1% and 0.5% respectively. However, this is not a long term trend, experts say.

(Narendra Nathan/ET Bureau)

Sector update: Consumer staples

Summer products will face heat due to peak season curbs:
Streamlined home delivery of goods does away with panic buying by customers.

Cooling hair oil, cold beverages, ice creams, glucose, beer, etc will see a bigger adverse impact due to the second wave restrictions given the first quarter is a peak season. Due to the restrictions, such products will face challenges. Besides, OOH and discretionary are likely to be impacted. We expect most companies to clock good growth on a two-year basis. We expect sales of health products and immunity boosters to accelerate. Packaged foods, ready-to-cook and cooking aids are also likely to rebound month-on-month.

Consumer sentiment this time round is more subdued than last year. People are prioritising purchase of essential items. Lockdown-related restrictions will have an impact, especially on out-of-home channels and products such as sun screen cream/lotion and confectionery.

Companies prepared

Companies had shored up warehouses, manpower, logistics, sales priorities and capabilities as this lockdown was expected. They have invested in automation, alternate sales servicing mechanisms and capacity augmentation in supply chain. FMCG brands have managed to maintain strong production this time round, which rules out any major stock-outs.

FMCG companies and retailers are much better prepared than last year. Availability of goods would be higher. Home delivery by both kiranas and e-commerce is on. Customers, unlike last year, are not panic buying; instead, there is anxiety buying. Consumers are reasonably assured of supply, although e-commerce delivery is not as quick as it was, say, two months ago.

(Edelweiss)