FMCG Stocks To Rescue In The Falling Market

Stock Market Crash on Tuesday

BSE Sensex and NIFTY50 witnessed their worst fall in over 4 years, this Tuesday. The Sensex experienced a steep decline of over 4000 points, while NIFTY slipped by 5%, making it the most significant drop in 4 years. This happened, a day after markets clocked the best trading session in over 3 years, on Monday. The BSE Sensex and NIFTY 50 touched all-time highs, by rising over 3% on Monday.

Cause

Prime Minister Modi-led NDA did not achieve the number of seats the markets were expecting in the 2024 General Elections. This was a result of the strong fight put up by INDIA. Now, with the return of coalition parties, a correction of over 5-8% took place. 

FMCG Index

Both the Indian equity benchmarks bounced back on Wednesday. The BSE Sensex surged by 3.2% and the NIFTY bounced back with a gain of 3.36%. While the FMCG shares performed well on both the days. As investors flocked to the FMCG sector, the NIFTY FMCG Index shot up by 5% nearly. 

Why This Surge In FMCG Stocks?

As market participants turned defensive after the disappointing Lok Sabha election results and high volatility in the market, investors have turned to the FMCG Sector for rescue. Apart from this, analysts are expecting the government to increase their spending on rural revival and boost consumption, giving altogether more reasons for investors to invest in consumption stocks. In addition to the rural revival, favorable monsoon conditions are also a driving force for the rise in investments in the FMCG sector.

Conclusion: The FMCG sector valuation is likely to see a re-rating with the emergence of tailwinds and seasonal support.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.