While the Indian equity market is undergoing a correction phase and there is a huge cry about the slowdown in domestic consumption, the FMCG stocks have started showing some strength and have started outperforming the benchmark Nifty50

Yes, the domestic consumption is facing some pressure but the price behaviour of FMC Stocks suggests that the worst is over for stocks as far as price is concerned. The CNX FMCG index (See Image -1 Below) is consolidating at lower levels.

When the FMCG Index was continuously falling, the RSI started showing strength and did not make a new low which was a first sign of strength (Please refer to the red trend line plotted on the RSI indicator). Now, the FMCG index is consolidating, the RSI has started moving higher and is continuously making higher highs and higher lows ((Please refer to the black trend line plotted on the RSI indicator). It suggests a trend reversal. It is important to note that 20 DEMA, 50 DEMA and 200 DEMA are within 1000 points range. In my opinion, a weekly closing above 58100 level will confirm the trend reversal.

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Vinay Kumar Taparia

SEBI Registered Research Analyst
Registration No. INH000018276

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