Should you add a pie for defensive FMCG stocks to your portfolio?

Even though the Nifty FMCG year-to-date (YTD) performance has caused the BlueChip Nifty50 to perform poorly, the index's 52-week high of 66,438.7 has dropped by about 15%, while some stocks in the basket have also dropped sharply.

Simple

Most of these stocks hit their respective record highs when the market hits its peak or when Finance Minister Nirmala Sitharaman announced an income tax relief in his budget speech for 2025 to boost consumption and stimulate growth. Nevertheless, from the high point there is significant correction in some counters.

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Now, with the global headwinds following the global tariff war trending between losses and gains between losses and gains, FMCG stocks contradicted the stocks at the time and gave up to 18% returns over the past month.

Stocks such as Tata Consumer Products, Britannia, Godreggie Consumer Products and Marico have risen 15-18% in the past month, while Nifty, who has earned more than 4% in the past 4 meetings.

Will the upward trend of FMCG stock continue or decline?

Optimistic about the prospects for the FMCG basket, Preeyam Tolia – Senior Research Analyst FMCGs“We are currently experiencing volatility in various sectors due to the uncertainty of the global macroeconomic. In response, investors often attract domestic defenses, especially in terms of consumption,” Shi said.

With global uncertainty investors transfer to domestic defense capabilities, similar viewing vision MISHRA-SVP, Research, Research, Religious Broker said: “FMCG stocks are transferred to domestic defense capabilities in investors.

He added that government-led rural spending, moderate inflation, and strong monsoon forecasts further boosted the outlook.

On a similar standpoint, Preeyam pointed to the following strong headwinds for the industry that could help recover from fiscal 26.

1. Continuous recovery of rural markets

2. Steady inflation outlook is 4-5%, and recent tax rate reduction announcement by the Reserve Bank of India

3. Normal monsoon forecast

4. Reduce crude oil prices, which will greatly reduce packaging costs

All of these factors are expected to gradually recover the FMCG division in the coming quarters. In addition, the recent correction of the selected FMCG stock provides investors with some safety leeway.

However, under warning, Hong Kong-based global brokerage firm CLSA said in a recent notes on consumer stocks that Indian FMCG stocks are the most expensive in the world on P/E, especially in the context of anemia growth and a decline in yields.

Similarly, it was cautious on Hindustan Unilver and Marico, while downgrading Godrej consumers to underperform with a target of Rs 1,060.

Similarly, for HUL and Marico, the broker’s targets are Rs 1,924 and Rs 492, respectively.

What should investors do?

Mishra said companies in the space may benefit from volume boosts and profit margins. Investors can take a staggered approach and prefer players with profit margins with strong brand equity and rural penetration. He added that ITC provides an attractive combination of defense and value.