Can FMCG Stocks Shield Your Portfolio During Current Uncertain Times?

Even though Nifty FMCG has on a year-to-date (YTD) basis has underperformed the bluechip Nifty50 index by a tad percentage, the index has from its 52-week high of 66,438.7 has fallen around 15 per cent and in-line some of the stocks from the basket have also declined sharply.

Here’s in brief recorded the fall in Nifty FMCG stocks from all-time high levels

Stock	All time high price	LTP as on April 17	% decline
United Breweries	2,299.1 (Feb 3, 2025)	2,147.4	7
Nestle	2,777 (Sept 27, 2024)	2,416.6	13
Varun Beverages	682.84 (July 29, 2024)	556.75	18.5
Tata Consumer	1254.01 (March 7, 2024)	1120.2	11
Radico	2637 (Jan 3, 2025)	2460.3	7
Britannia	6473.1 (Oct 3, 2024)	5454.6	16
United Spirits	1700 (Jan 3, 2025)	1517.8	11
ITC	500.01 (Sept 27, 2024	427.25	15
Colgate Palmolive	3893 (Oct 4, 2024)	2570.5	34
Hindustan Unilever	3034.5 (Sep 23,2024)	2375	22
Godrej Consumer	1541 (Sep 11, 2024)	1239	19.6
Dabur	672 (Sep 17, 2024)	479.5	29
Marico	736.1 (Feb 1, 2025)	714.8	3
Patanjali	2030 (Sept 4, 2024)	1973.1	3
Emami	859.2 (Sept 6, 2024)	615	28

 

Most of these stocks touched their respective record highs either at a time when markets touched their peak or around the time when Finance Minister Nirmala Sitharaman announced income tax relief during her Budget 2025 speech to boost consumption and spur growth. Nonetheless, from the highs there has been recorded a notable correction in some of the counters.

FMCG stocks seen defying broader market trend

Now, as market is gyrating between losses and gains amid global headwinds in the wake of global tariff war, FMCG stocks stood against the time and gave stupendous return of up to 18 per cent in the last one month.

Stocks like Tata Consumer Products, Britannia, Godrej Consumer Products and Marico all gained between 15-18 per cent in the past one month when Nifty on the back of recent hefty gains for the past 4 sessions managed to deliver over 4 per cent return.

Will uptrend in FMCG stocks continue or wane away going ahead?

Sounding optimistic on the prospects of the FMCG basket, Preeyam Tolia- Senior Research Analyst- FMCG, Axis Securities.said, “We are currently experiencing volatility across various sectors due to global macroeconomic uncertainty. In response, investors are generally gravitating towards domestically oriented defensive plays, particularly in consumption.”

Echoing a similar view-Ajit Mishra – SVP, Research, Religare Broking said, “FMCG stocks are gaining traction as investors shift focus to domestic defensives amid global uncertainty. The sector is supported by softening input costs (palm oil, crude derivatives), signs of rural demand recovery, and a continued urban premiumization trend.”

Government-led rural spending, moderating inflation, and a strong monsoon prediction further boost the outlook, he added.

Opining a similar stance Preeyam noted the following strong tailwinds for the sector which are likely to help in the recovery of the sector in FY26

1. Continued recovery in rural markets

2. A stable inflation outlook of 4-5%, along with the Reserve Bank of India’s recent rate cut announcement

3. A normal monsoon forecast

4. Lower crude oil prices, which will significantly reduce packaging costs

All these factors are expected to contribute to a gradual recovery in the FMCG sector in the coming quarters. Additionally, the recent correction in selective FMCG stocks provides some margin of safety for investors.

However, on a cautionary note, Hong-Kong based global brokerage CLSA in its recent note on consumer stocks said, on P/E, Indian FMCG stocks are among most expensive in world, especially in context of the anaemic growth & shrinking returns.

Likewise, it has turned cautious on Hindustan Unilver and Marico, while downgraded Godrej Consumer to underperform with the target at Rs 1,060.

Also, for both HUL and Marico, the brokerage has a ‘reduce’ call with the target pegged at Rs 1,924 and Rs 492, respectively.

What should investors do?

Mishra said companies from the space are likely to benefit from a volume uptick and margin tailwinds. Investors can adopt a staggered approach, preferring margin-accretive players with strong brand equity and rural penetration. ITC offers an attractive mix of defensiveness and value, he added.