As Markets Remain Volatile, Analyst Signal Caution For Consumption Sector

As Markets Remain Volatile, Analyst Signal Caution For Consumption Sector

After hitting the all-time high in the last week of February, markets have been walking on shaky path.

Juviraj AnchilUpdated: Wednesday, March 20, 2024, 01:02 PM IST
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Tuesday was a fairly tumultuous day for markets and Indian indices, this as Sensex closed the day at 72,012.05, slumping by 736.37 points or 1.01 per cent. In addition, Nifty ended negatively at 21,813.50, also slipping by a margin of 242.20 points or 1.1 per cent.

The markets however opened in green on Wednesday, with Sensex trading at 72,203.79 with a 0.27 per cent gain (12:37 IST). The Nifty trading at 21,871.10, gaining 0.25 per cent (12:37 IST). Nevertheless, the uncertainty has continued for most of March. After hitting the all-time high in the last week of February, markets have been walking on shaky path. It was last week, that Sensex lost nearly a 1000 points in just a day's trade.

This has many facets and elements contributing to it, many being inextricably global in nature. It is at this time, some observers and analysts are asking investors to be cautious, particularly with businesses in the consumption sectors. With food security and availability of fundamental components being top priority for authorities in an election year, measures may be implemented by authorities, that could have a ripple effect on the companies, that are reliant on extensive supply chain.

In addition, apart from procurement of the raw material for the prime product, concerns are also regarding fuel, that is an integral part of the aforementioned supply chain. Recent drone attacks on Russian crude facilities by Ukraine could further add to the woes.

This in addition to the OPEC retention of their policy to cut their output could only add to the fuel problem. After hovering around the USD 80 a barrel mark for most of February and even early March, Brent Crude has now touched the USD 87 mark.

All these developments, according to observers may make entering the direct consumer and consumption driven companies a tough place to invest.

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