Lok Sabha Elections 2024: HUL, Britannia support Sensex, Nifty amid heavy fall

Fast Moving Consumer Goods (FMCG) stocks like Hindustan Unilever (HUL) and Britannia gave much-needed support to the headline indices in the morning deal. The market has been witnessing a steep fall due to Lok Sabha election results which will be released later in the day.

At around 11:18 a.m., shares of HUL traded 3.06 per cent up at 2,428 apiece and Britannia shares were up 0.67 per cent at 5,202.6 apiece on NSE. 

However, Nifty FMCG was down over 0.8 per cent at 54,191.8 at around the same time with Balrampur Chini, Radico Khaitan, and Varun Beverages among the top losers. Meanwhile, HUL, Dabur, Marico, and Colgate Palmolive were among the top gainers. 

Indian share market today plummed in the morning deals on Tuesday, June 4. Atul Parakh, CEO of Bigul attributes that fall to to rising rates and recession fears, but also the uncertainty surrounding the ongoing Lok Sabha elections.

Parakh suggests investors avoid knee-jerk reactions and reassess portfolios based on risk profiles. 

"Quality stocks at discounted valuations are opportunities for long-term holders. However, brace for volatility until the election results provide clarity. Diversification across asset classes remains crucial. Consult financial advisors to review portfolios. Once the political landscape settles, the market could find support if a stable government emerges to drive economic reforms," said Parakh. 

Vaibhav Jain,Head of Content & Education, Share.Market reckons strength in FMCG as it is a defensive sector.

"The stocks in defensive sectors are generally those which are expected to do well irrespective of the government in power. Hence, in situations of uncertainties when broader markets are falling, these sectors run counter to other sectors and hence we are seeing them up today. The stability and reliability of companies in the FMCG sector is captured by the Quality score in our factor models too," said Jain.

What should investors do? 

As per Parakh, the FMCG sector is anticipated to experience both challenges and opportunities during the elections. One notable impact is the shift towards smaller pack sizes and value offerings by FMCG companies to cater to the budget-conscious consumer sentiment during election periods.

"Additionally, increased promotional activities and marketing campaigns are expected as companies vie for consumer attention amidst heightened competition. However, the FMCG sector may also face logistical challenges such as transportation disruptions and inventory management issues due to heightened demand fluctuations during election seasons," said Parakh.

Parakh added consumer spending patterns may temporarily shift towards essential goods, impacting discretionary spending on FMCG products. Overall, while the FMCG sector may witness short-term fluctuations, companies with agile marketing strategies and robust distribution networks are better positioned to navigate through the election period and capitalize on emerging opportunities in the consumer market.

Catch all the updates of June 4 session on Dalal Street here. For all other news related to business, politics, tech and auto, visit Zeebiz.com.

Catch all the latest updates on the counting of votes for Lok Sabha, state Assembly and bye elections here.

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