InvestorQ : Why are consumption stocks like Hindustan Unilever, Relaxo Footwear, D-Mart and Trent going up so sharply despite high valuations? Can this continue?
Angel dcosta made post

Why are consumption stocks like Hindustan Unilever, Relaxo Footwear, D-Mart and Trent going up so sharply despite high valuations? Can this continue?

Answer
image
2 years ago
Follow

Whether this can continue is hard to say but I would believe that it is perfectly possible. Let me tell you why. There are 3 things that are in favour of these consumption stories. Firstly, the new change in the Income Tax rules will make a lot of consumption money available in the hands of the middle and aspiring class. That is likely to give a big boost to consumption and these names will benefit. Secondly, the government has committed nearly Rs.130,000 crore to give a boost to rural infrastructure and combined with rural jobs and better MSP, you could see a sharp revival in the demand for most of these consumption products. Lastly, the better than expected Rabi crop output; it is up by 9.5%, will more than compensate for the weakness of the Kharif. If you add these three things up, then there is a big potential for these consumption stocks. Yes they are richly valued but investors find them safe bets so you really cannot argue with that.

10 Views