The Indian stock market has been going down for the last four months. After hitting a record high on September 27, 2024, the popular Nifty 50 index dropped 11.5%. This drop happened because the country’s economic growth (GDP) was weaker than expected, and companies shared lower earnings than predicted, making investors worried. Because of this, many investors are now being more cautious, choosing safer industries over more risky ones.
In this situation, industries like IT, Pharma, Healthcare, and FMCG (Fast-Moving Consumer Goods) have stayed strong, showing less decline compared to the wider market drop. A special chart shows the Nifty FMCG Index compared to the Nifty Small-Cap Index, and right now, this chart is showing a low point not seen in 13 years. Historically, when it reaches this level, it often leads to a bounce back towards safer options like FMCG.
The FMCG sector usually does well from March to September. Over the past 15 years, it has given good returns more than 70% of the time during this period. Last year, I pointed out that FMCG might perform well starting in March, and it did, rising 22% and reaching a new peak by September 23. This year, a similar trend looks possible again.
Currently, FMCG’s weight in the Nifty 500 is just 6.36%, below its usual level of 8.20%. This means that stocks in the FMCG category are not as popular right now, suggesting they could go up in value.
Even though the FMCG sector has been growing slowly recently, a boost in sales and profits could lead to higher stock prices. Also, an important event called the Maha Kumbh Mela started on January 13, 2025, and is expected to bring around 400 million visitors over 45 days. This huge crowd will likely increase the demand for FMCG products, helping the sector’s growth.
All of these reasons show that the FMCG sector could perform really well in the coming months. Investors should think about adding good FMCG stocks to their portfolios to take advantage of this strong potential during uncertain market times.
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