HUL soars despite a weak market! Is it time to shift focus towards FMCG stocks?
Shares of Hindustan Unilever Ltd has soared over 3% despite weak market sentiment.
On the technical chart, the stock has formed a strong bullish candle and has crossed above its 100-DMA level. After correcting about 12% from its recent swing high of Rs 2413, the stock has since good buying interest at its oversold region. Interestingly, the stock has bounced from its 200-week MA and its level of Rs 2100 is expected to act as a strong support level. Meanwhile, the stock is about 15% higher than its prior swing low level of Rs 1901.
The 14-period daily RSI (46.57) has seen a sharp bounce from its oversold counters and points upwards. The negative MACD histogram has been seen receding slightly, indicating a weakening of the downtrend. Meanwhile, the TSI and KST indicator also show improvement in the stock’s performance. The Relative Strength (RS) Indicator is above the zero level and indicators positive strength of the stock as against the broader market.
In the past three months, the stock is up 4% and has relatively performed better than most of its peers and Nifty 50 index. The FMCG companies have seen a negative impact on their supply chains, due to the ongoing war and increase in raw material prices. Thus, the market expects a dent in the operating profits of the companies. However, with the global recession looming around, the demand for necessary basic and food items shall continue to be higher. Thus, the FMCG stocks can act as a good defensive bet for medium term. The Nifty FMCG is up nearly 2% and has outperformed the other sectoral indices.
Hindustan Unilever Ltd., being one of the most profitable and fundamentally strong companies in its sector, is expected to be a good bet for the given situation. With this, it is expected to be trading higher in times to come. The medium-term targets of the stock are Rs 2250, followed by Rs 2340.
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