In periods of heightened market volatility and macroeconomic uncertainty, investors tend to gravitate toward safer avenues. One of the most consistent and reliable havens has historically been the Fast-Moving Consumer Goods (FMCG) sector. Known for its defensive characteristics, FMCG tends to offer both protection and stability when other sectors falter.
The strength of the FMCG sector lies in the essential nature of its products—items like soaps, detergents, packaged foods, and toothpaste, which remain in demand regardless of the economic climate. People don’t stop brushing their teeth or washing clothes even during economic downturns. This consistent demand translates into relatively stable revenues and earnings for FMCG companies, making their stocks less vulnerable to sharp corrections compared to the broader market.
While India is more domestically driven and less dependent on exports than economies like China, it is not immune to global disruptions. Trade wars, geopolitical conflicts, and inflationary pressures can impact global economic growth, and India will inevitably feel some of the aftershocks. In such scenarios, re-evaluating one’s investment portfolio becomes crucial, and FMCG stocks often emerge as a strong consideration.
The resilience of FMCG stocks during market crashes is supported by historical evidence. During the 2008 global financial crisis, the Sensex plunged by about 60%, whereas the FMCG index dropped by only 28%. A similar trend was observed during the COVID-19-led crash in early 2020, where the broader market lost close to 40% while the FMCG index fell by just 27%. These instances highlight the relative safety the FMCG sector offers in times of crisis.
However, one must be mindful of the entry point. When a downturn begins, there’s often a stampede into defensive sectors like FMCG, which can quickly drive valuations to elevated levels. This reduces the upside potential and could offset the benefit of downside protection. Therefore, it’s important to evaluate whether these stocks are reasonably priced relative to their long-term averages. Encouragingly, major FMCG names such as Hindustan Unilever, Nestle India, Dabur, ITC, and Emami are currently trading close to or below their historical valuation multiples, suggesting that there may still be room for prudent accumulation.
The past decade presents another layer of evidence supporting FMCG’s strength. Between 2010 and 2020, India’s GDP growth faced several headwinds—from policy reforms like GST and demonetisation to external shocks and the COVID-19 pandemic. Growth slipped below 7% for several years and even turned negative in 2020. Despite this challenging environment, FMCG stocks outperformed the broader market by a significant margin. While the Sensex grew 2.3 times over the decade, the FMCG index delivered a return of 3.5 times. Individual companies like Britannia, Hindustan Unilever, Marico, and Godrej Consumer delivered even higher returns, with some gaining more than 6-8 times in value.
This divergence in performance illustrates a key point: FMCG stocks are not just a hedge against short-term volatility but can also generate superior returns over longer periods of economic stagnation. Their business models, rooted in non-discretionary spending, help them maintain profitability and cash flows even when other sectors are struggling.
However, like any investment, timing and allocation matter. Entering early into FMCG—when valuations are still reasonable—allows investors to capture both the defensive benefits and potential upside. On the other hand, chasing these stocks after they’ve already rallied during a downturn may limit returns and increase risk.
In conclusion, FMCG stocks have demonstrated time and again that they can serve as both a shield and a sword during challenging market conditions. Their resilience during past crises and outperformance during low-growth periods make them a compelling option for investors seeking stability without completely sacrificing growth. With global uncertainties on the rise and concerns of a potential slowdown looming, reallocating part of the portfolio into well-valued FMCG names could be a sound strategy. Not merely as a temporary hideout, but as a core component of a resilient long-term investment portfolio.
Market this week
| 28th Apr 2025 (Open) | 02nd May 2025 (Close) | %Change | |
| Nifty 50 | ₹ 24,070 | ₹ 24,347 | 1.1% |
| Sensex | ₹ 79,344 | ₹ 80,502 | 1.5% |
Source: BSE and NSE
- Indian stock indices extended their winning streak for the third consecutive week, marking the longest run since December 2024.
- Despite ongoing geopolitical tensions, markets posted over 1% weekly gains, supported by strong FII inflows, stable Q4 earnings, easing tariff concerns, record GST collections, and buoyant global cues.
- Sectorally, Nifty Oil & Gas led the gains with a 4.3% rise, followed by Realty (2.5%), Auto, IT, and Healthcare (1% each).
- On the downside, Nifty Media fell 1.7%, while Nifty Metal declined 0.6%.
- FIIs remained net buyers for the third week, investing ₹7,680 crore, while DIIs also supported the market with ₹9,269 crore worth of equity purchases.
Weekly Leaderboard
| NSE Top Gainers | NSE Top Losers | ||||
| Stock | Change (%) | Stock | Change (%) | ||
| Reliance Industries | ▲ | 9.4% | Shriram Finance | ▼ | -7.8% |
| Adani Ports SEZ | ▲ | 6.2% | JSW Steel | ▼ | -5.4% |
| Maruti Suzuki | ▲ | 6.1% | Ultratech Cement | ▼ | -4.8% |
| Bharat Electronics | ▲ | 4.6% | Bajaj Finserv | ▼ | -4.3% |
| SBI Life | ▲ | 4.1% | Hero Motocorp | ▼ | -4.0% |
Source: BSE
Stocks that made the news this week:
T stocks were in focus as Cognizant Technology Solutions posted robust Q1 results, with revenue rising 7.5% YoY to $5.1 billion, beating guidance and Street estimates. Net profit jumped 21% to $663 million, and the company raised its annual revenue forecast, buoyed by increased demand for AI-driven IT services. This lifted investor sentiment in Indian IT majors, with shares of TCS, Infosys, Wipro, and HCL Tech rising up to 1.5%, outperforming the 1% gain in the Nifty IT index.
The Bank Nifty index helped cushion market losses on May 2, as profit booking hit several sectors after a strong morning rally. Key banking stocks like HDFC Bank, ICICI Bank, SBI, and Axis Bank saw intraday gains between 0.2% and 1%. Investor optimism surrounding the March quarter earnings kept sentiment buoyant, particularly ahead of SBI’s Q4FY25 results scheduled for May 3.
Auto stocks surged after robust April sales data. Maruti Suzuki led the gains with a nearly 4% rise, hitting a two-month high, after reporting total sales of nearly 1.8 lakh units—up 7% YoY. Domestic sales grew 4%, while exports jumped 26%. Notably, LCV sales rose 34% YoY. M&M also saw its stock rise nearly 2% as it reported a 19% YoY increase in April sales, reaching 84,170 units.
