September 5, 2018 / 9:56 AM / a year ago

BUZZ-India's top consumer stocks slide on valuation concerns

** Top Indian consumer goods companies Hindustan Unilever Ltd (HUL), Nestle India Ltd fall 3.3 pct and 6.2 pct, respectively

** Consumer stocks have taken a hit since Sept. 3

** Since March 2018, investors have seen FMCGs as a better defensive buy and a safe place to be in, but there are now concerns about valuation, says Deepak Jasani, head of retail research at HDFC Securities

** The way FMCGs rose from March-end through August, it seemed they would keep rising in terms of bottomline at 18-20 pct over the next 5-7 years, which seems a very difficult assumption to digest especially from a large base, Jasani adds

** “It is a reality check now – investors have realized they had gone overboard in giving such high valuations to FMCG stocks”

** Nestle shares fall 6.2 pct to 10,175 rupees in their sharpest drop since Nov. 2016

** HUL falls to a 10-week low of 1,596 rupees, is among top drags on the Nifty 50 index;

** HUL may fall up to a support at 1,566.35 rupees, the 23.6 pct Fibonacci retracement level of the uptrend from Dec. 23, 2016 low to Aug. 20, 2018 high

** HUL is in the fourth wave (a corrective wave) of a five-wave uptrend

** Hindustan Unilever now lags ITC in terms of market capitalization

Additional reporting by Gaurav Dogra

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