Indian stock markets have seen significant volatility in the past few months. After almost breaching the 86,000-mark in September, the Sensex has now dropped nearly 10,000 points to close at 76,330 on January 13. Shares of Fast-moving consumer goods (FMCG) companies couldn't isolate themselves from the market downturn. The stocks have seen strong correction from their respective record high levels seen in 2024 amid multiple signs of slowing down of consumption.
The sectoral index Nifty FMCG has so far fallen around 10,000 points from its September peak to settle at around 56,000.
Hindustan Unilever (HUL) has the highest market cap among the FMCG companies. The stock had hit a 52-week-high record of Rs 3,035 on September 23. The shares have so far fallen over 19% from that level to close at Rs 2,451 apiece on January 13.
ITC shares also recorded strong losses after hitting a 52-week-high record of Rs 528.5 on September 27. ITC shares closed at Rs 439.05 on January 13. This marks a fall of around 17% from the record high level.
Nestle shares closed at Rs 2,237.35 on January 13. The shares have so far fallen around 19% from their 52-week-high record of Rs 2,778 apiece. The stock had traded at the record high level on September 27.
Britannia Industries saw one of the biggest falls among the top FMCG players. The shares closed at Rs 4,927.05 on January 13. This marks a decline of nearly 31% from the 52-week-high level of October 3.
Godrej Consumer shares had hit a 52-week-high record of Rs 1,541.85 on September 11. Since then, the shares have fallen around 24% to January 13 closing level of Rs 1,159.
Shares of Tata Consumer also joined the bandwagon, falling over 23% since March 11 when they had hit 52-week high record of Rs 1,256. The shares closed at Rs 965.45 on January 13.
Dabur shares closed at Rs 510.75 on January 13. This marks a fall of nearly 24% from the 52-week-high record of Rs 672, which the stock had hit on September 17.
Marico has comparatively seen a lesser fall in share price than its FMCG peers. The stock has so far fallen around 7% from its 52-week-high record of Rs 719.85.
Colgate Palmolive has seen a strong fall in share. After hitting a 52-week-high of Rs 3,890 on September 30, the stock dropped around 29% to close at Rs 2,752 on January 13.
What lies ahead for FMCG stocks?
Analysts, however, are hopeful about recovery in the FMCG sector. International brokerage Nomura in its recent note said it finds valuations in the consumption space reasonable along with prospects of strong growth. It recommended investors to buy HUL, ITC and Marico.
CLSA also recently turned bullish on the sector. It called FMCG its largest 'overweight' sector in India portfolio.
"The FMCG sector, in general, has shown positive divergence and buying interest at lower levels, reversing from oversold territory," said Jay Thakkar, Vice President & Head of Derivatives and Quant Research at ICICI Securities.
"FMCG or the discretionary consumer stocks have corrected considerably on the back of continued weakness in consumer spending in the festive season which is contrary to the rising hopes of a gradual revival in consumer demand expected by the street few months back. We expect the weakness in consumer spending to persist and consequently, one needs to be careful in selecting the FMCG stock and also have investment horizon of at least 12-18 months," Sharekhan's Gaurav Dua told Moneycontrol in November.
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