Sector movers: Food retailers rebound after recent falls, Tesco rises

14th Jul 2014 15:22

Bargain-hunting was benefiting the food and drug retail sector on Monday as supermarket stocks recovered after suffering some heavy falls last week.A strong rebound across the wider market was experienced today with the FTSE 100 rising 1% after dropping 2.6% last week on concerns over Portugal's banking sector and high valuations. The FTSE 350 retail sector in particular had lost 4.3% of its value over the previous five sessions after data last week showed that food price inflation was at its lowest on record in June."Traders comforted with a decent correction and the perception of better value start the latest round of 'buy on the dip' investment," said Alastair McCaig, Market Analyst at IG.Tesco, the largest stock in the sector with a market cap of around £23bn, was trading 2.5% higher today after analysts at Cantor Fitzgerald raised their rating on the stock to 'buy' and hiked their target for the shares from 282p to 325p.Cantor said: "This [upgrade] reflects our view that Tesco UK is 35% undervalued compared to its UK peers and that Tesco's reconfiguration of its UK operations could, in our view, be successful in recapturing the shifting customer base in retail."The broker said that the first half of the current financial year could mark a "low point" for operations in the UK. However, new Chief Financial Officer Alan Stewart, who joined from Marks & Spencer last week "could, in our view, bring some renewed confidence to forecasts".Supermarket peers J Sainsbury and Wm Morrison and online grocer Ocado were also on the rise today, along with high street retailers Greggs and Thorntons.Top performing sectors so far todayFood & Drug Retailers 3,670.85 +2.21%Chemicals 10,012.13 +1.98%Beverages 14,249.68 +1.89%Mobile Telecommunications 4,370.19 +1.78%Automobiles & Parts 8,367.94 +1.76%Bottom performing sectors so far todayPersonal Goods 22,931.37 -0.45%BC