FMCG Sector Lags in Early FY25 as Investors Shift Focus
As financial year 2025 begins, equity markets have seen notable sectoral shifts, with fast-moving consumer goods (FMCG) stocks underperforming amid broader bullish sentiment. While defence and pharmaceutical stocks have led the rally, FMCG and auto sectors have emerged as the worst-performing segments in the early stages of the fiscal year.
Data from the National Stock Exchange (NSE) shows that the Nifty FMCG index recorded a marginal decline of 0.1% between April 1 and May 9, despite a 2.6% rise in the benchmark Nifty 50 over the same period. In contrast, Nifty’s pharma index surged over 8%, while the defence segment, particularly companies like Hindustan Aeronautics and Bharat Dynamics, posted sharp gains.
FMCG giants such as Godrej Consumer Products and Dabur India have experienced notable declines—dropping 12.5% and 11%, respectively—since the start of FY25. Other prominent players like Emami and Tata Consumer Products have also recorded losses of 6–8%. The muted performance has been attributed to weaker-than-expected earnings and cautious commentary during the Q4 FY24 earnings season.
Rural demand recovery remains tepid, and although pricing power has stabilized post-pandemic, volumes have not picked up uniformly. Analysts suggest that the current underperformance may also result from a sectoral rotation by investors anticipating higher returns in manufacturing-led and industrial growth stories, which have gained traction ahead of India’s general elections.
“FMCG stocks are currently polarized—companies with strong growth visibility and consistent performance are attracting investor interest, while others are being pared down,” said Hemang Jani, a market expert quoted in the report.
Looking ahead, the FMCG sector’s fortunes may hinge on the pace of rural recovery, festive season demand, and the impact of a potentially normal monsoon. While long-term outlooks remain structurally positive, short-term investor sentiment appears skewed towards more cyclical and capex-linked sectors.
For FMCG players and investors alike, the coming months could provide clarity on whether this early FY25 underperformance represents a temporary setback—or a broader rotation in market preferences.