FMCG stocks are in the green today in an otherwise lacklustre market. In a market that is currently spooked by probability of another rate hike by the US Fed in its meet scheduled for 21st Sept, FMCG stocks are today the among the most sought after ‘defensive’ stocks’.
Defensive stocks are those that lend stability to the, both in terms of risk and in terms of volatility of returns. In such uncertain times, its typical market behaviour to pick up FMCG stocks as the perception is that even if the economic growth is further impacted, it will not impact the demand too much as these are day-to-day needs which cannot be simply done away with. Also with festive season taking off in full-on mode, many are seen accumulating this sector. They might not give you alpha returns but will give you a steady return. These stocks rise slower than the market when it is uptrend and fall more slowly than the market fall or down trend. The core idea is to protect your portfolio value during bad times.
Colgate, Dabur, Marico, HUL, Britannia, Tata Consumer, Godrej Consumer, Nestle are up in the green though P&G, ITC remain in the red.