FMCG Stocks Outperform as Tariff Concerns Weigh on Indian Markets
Indian equity benchmarks closed lower on Monday, with the Sensex falling over 400 points and the Nifty settling below the 22,400-mark, as investor sentiment soured amid global trade uncertainties. However, FMCG stocks bucked the broader market trend, emerging as standout performers driven by renewed investor interest and relative sector resilience.
The BSE Sensex slid 425 points, or 0.57%, to end at 73,511, while the NSE Nifty declined 121 points, or 0.54%, to 22,302. Market volatility increased after U.S. President Joe Biden announced higher tariffs on Chinese imports, heightening global trade war fears. Closer to home, the Reserve Bank of India’s (RBI) decision to pause on rate cuts also dampened investor appetite for risk assets.
Despite the bearish tone across sectors, the FMCG index emerged as a bright spot, posting a gain of nearly 1%. Shares of Hindustan Unilever Ltd, Nestle India, and ITC rose between 1–2%, underscoring the defensive appeal of consumer staples amid macroeconomic uncertainty. Analysts attribute this rally to expectations of rural recovery, stabilizing input costs, and sustained demand resilience.
“FMCG companies are benefitting from improving volume growth trends and moderating inflation in raw materials like palm oil and packaging,” said a Mumbai-based equity strategist. “In a risk-off environment, the sector’s consistent cash flows and pricing power make it attractive to investors.”
Elsewhere, rate-sensitive sectors like banking and auto came under pressure as the RBI opted to hold policy rates steady. Market participants had anticipated a more dovish stance amid easing inflation data.
The divergence in sectoral performance signals a tactical shift among investors favoring staples over cyclicals, particularly in light of global uncertainties and domestic policy continuity ahead of the general elections.
With FMCG firms entering FY25 amid signs of rural demand revival and improved profitability metrics, the sector is likely to remain on the radar of institutional investors seeking defensive allocations with growth potential.