Can FMCG Stocks Shield Your Portfolio During Current Uncertain Times?

NIFTY FMCG has been performing at a slightly lower percentage on the Bluechip Nifty50 index on a (YTD) basis since the beginning of the year, but the index has dropped by around 15% from its 52-week high of 66,438.7, and some stocks from the basket also fell sharply.

This easily recorded a clever FMCG stock decline from the highest level ever

Most of these stocks touched on their respective record highs at a time when the market was on the peak, or at the time when Finance Minister Nirmala Sitharaman announced income tax easing in his Budget 2025 speech to promote consumption and growth. Nevertheless, from the highs, notable corrections have been recorded at several counters.

FMCG stocks are bucking broader market trends

Now, as markets are losing and profit amid global headwinds in the wake of the global tariff war, FMCG stocks have faced the time, bringing amazing profits of up to 18% over the past month.

Shares such as Tata Consumer Products, Britannia, Godrej Consumer Products and Marico have acquired between 15-18% over the past month, and have made significant recent profits in the past four sessions, providing more than 4% returns.

Will the upward trend in FMCG stocks continue or decline?

Sounds Optimistic about FMCG Basket Outlook, Preeyam Tolia – Senior Research Analyst – FMCG, Axis Securities“We are currently experiencing volatility in various sectors due to global macroeconomic uncertainty. In response, investors are drawn to domestically oriented defensive dramas, particularly in consumption.”

Repeat the same view – Ajit Mishra – SVP, Research, Religare Broking said, “FMCG stocks are gaining traction as investors focus on domestic defense amid global uncertainty. The sector is supported by input costs (coconut oil, crude oil derivatives), signs of a recovery in rural demand, and signs of a recovery in urban demand.”

Government-led rural spending, inflation easing and strong monsoon forecasts will further boost the outlook, he added.

Preeyam’s opinion, a similar stance, found that for sectors that are likely to help recover the FY26 sector, the following strong tailwinds were noted.

1. Continuous recovery in rural markets

2. Along with the recent announcement of interest rate cuts by the Reserve Bank of India, stable inflation outlook of 4-5%

3. Normal monsoon prediction

4. Lower oil prices, significantly reducing packaging costs

All these factors are expected to contribute to the gradual recovery of the FMCG sector for the upcoming quarter. Furthermore, recent revisions to selective FMCG stocks provide investors with some degree of safety margin.

However, in the warning memo, Hong Kong-based Global Securities CLSA, according to a recent memo on consumer stocks, at P/E, Indian FMCG stocks are the most expensive in the world, especially in the context of anemia growth and reduced revenue.

Similarly, Hindustan Unilver and Marico were cautious, but Godrej consumers downgraded their target of Rs 1,060.

Also for both Hul and Marico, the brokerages have “reduced” calls on targets pegged at Rs 1,924 and Rs 492 respectively.

What should investors do?

Mishra said businesses in the space are likely to benefit from rising volume and margin tailwinds. Investors can take a staggering approach, preferring margin accretive players with strong brand equity and rural infiltration. ITC offers an attractive combination of defensiveness and value, he added.