HUL shares rally over 16% in 2 days amid defensive buying; Jefferies sees upside potential of 10%
HUL surges 16% over 2 days due to defensive stock reallocation and Jefferies' upgrade. FMCG index outperforms amidst market volatility. Axis Securities recommends HUL and Nestle for 12-18 months amid uncertain political outlook and preference for quality, low-volatility stocks.
Shares of firm () have rallied nearly 16% in the last 2 days due to the reallocation of funds towards defensive and an upgrade by .“Surprise election outcome makes us believe that govt will likely adopt a more favourable towards , especially rural/BOP. This comes at a time when a few cos are pointing to an expected pickup in rural, which augurs well for HUL,” said Jefferies on its upgrade on the stock.
On Wednesday as well as Tuesday, the FMCG index staged a strong performance, with HUL taking the lead on both days.
“Our markets have seen high volatility in the last few days because of the mega event (). However, in such volatile time, the FMCG space has shown relative strength and stocks such as HUL, and Dabur are showing relative outperformance. Traders can look to buy HUL within this sector from a near-term perspective,” said Ruchit Jain, Lead Research at .
Along with HUL, stocks like , , , Britannia Industries and Godrej Consumer Products among others in the category displayed significant up-moves, going as high as 15%.
Further, with the BJP set to form the government without a simple majority, the future outlook remains unclear as there are multiple scenarios that might unfold given the formation of a coalition government.
Based on these developments, a report by Axis Securities states the volatility in the domestic market is likely to remain on the higher side for some time. Against this backdrop, the market positioning is likely to shift towards quality and low volatility stocks with some tilt towards defensive names.
Hence, HUL and Nestle among other stocks are recommended by Axis Securities for a horizon of 12-18 months.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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Source: Stocks-Markets-Economic Times
