ITC, Britannia top picks in FMCG sector: Ajay Bodke

In a chat with ET Now, Ajay Bodke, Head-Investment Strategist & Advisory of Prabhudas Lilladher shares his views on the market FMCG sector.

ET Now: The FMCG index has cracked 14% in the August series. What explains this price action?

Ajay Bodke: When large FII selling happens, you would like to pair down your positions in the sectors where you have large positions. For the last two years, most of the large FII buying had happened in some of the FMCG and pharma biggies in addition to some strong banking names like HDFC and HDFC Bank.

When you saw selling from the FII end over the last week or 10 days, they would be looking to pair down their positions from some of these very liquid mega large cap stocks. This is reason why we saw a cut in names like ITC.

If you take a fundamental view with a medium term perspective, some of the names like ITC or Britannia look extremely attractive because the earnings growth continues to remain robust.

With the best monsoons since 2001 and area under cultivation having gone up substantially, the rural demand will continue to remain very buoyant post harvest. From that perspective, the allocations will continue to remain on the higher side from the investors in the FMCG sector.

We would continue to advocate ITC and Britannia as the top picks in the FMCG sector.