Prices of agriculture and oil commodities showed mixed trends, according to Kotak Institutional Equities. This has had a varied impact on sectors that use these products as raw materials.
India's wholesale inflation climbed to the highest in 15 months, led by a surge in the prices of manufactured products and food. The Wholesale Price Index rose by 2.61% in May, as compared with 1.26% in April, according to data released by the Ministry of Commerce and Industry on Friday.
Agri-input prices have shown inflationary trends, experiencing a 7% month-on-month increase but remaining flat year-on-year. Liquid milk and milk powder prices surged by 10% month-on-month but saw a decline of 2% and 16% year-on-year, respectively.
Coffee, cocoa, and sugar prices continue to stay in the inflationary zone.
In the oil commodities sector, crude oil prices decreased by 9% month-on-month but gained by 8% year-on-year. Palm oil prices fell by 5% month-on-month, rising 2% year-on-year. Copra and coconut oil prices remained stable month-on-month but rose significantly by 15-20% year-on-year.
Other commodities showed a mixed trend. Prices for caustic soda and soda ash remained largely stable month-on-month, down 7% and 22% year-on-year, respectively.
Vinyl acetate monomer prices in China stayed below $850 per metric tonne, decreasing by 2% month-on-month and 6% year-on-year.
Prices of other paint-related commodities were also stable month-on-month, but in a deflationary zone year-on-year.
Beneficiaries
Hindustan Unilever Ltd., Godrej Consumer Products Ltd., and Jyothy Labs Ltd. are beneficiaries of stable caustic soda and soda ash prices.
Declining crude, VAM, palm oil, and other chemical prices are favourable for paint and fast-moving consumer goods players.
Inflationary copra prices benefit Marico Ltd. by aiding the conversion from loose to branded hair oil.
Impacted Companies
Rising milk and sugar prices negatively affect Nestle India Ltd., Hindustan Unilever, Britannia Industries Ltd., Varun Beverages Ltd., and quick-service restaurant players.
Continued inflation in barley prices may impact United Breweries Ltd.
Inflationary coffee and cocoa prices could adversely affect Nestle India Ltd. and HUL.
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