As Indian markets witnessed steep declines on April 7 amid growing concerns over a potential trade war triggered by US President Donald Trump's tariff imposition, the Nifty FMCG index emerged as the least impacted among sectoral indices amidst defensive buying. In contrast, the Nifty Pharma index came under significant pressure, following indications from the Trump administration about possible tariffs on pharmaceutical imports in the future.
Within the Nifty FMCG index, 3 out of 15 constituents managed to trade in positive territory despite the widespread selloff. Shares of Hindustan Unilever (HUL), Britannia, and Godrej Consumer Products posted gains of up to 0.6 percent, offering some resilience in an otherwise red-dominated market.
Meanwhile, the Nifty Pharma index saw all 20 of its constituents trading in the red. Stocks such as Biocon, IPCA Laboratories, Granules India, and Divi's Laboratories recorded sharp declines in the range of 6 to 7 percent, as sentiment soured further in the sector.
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The relative outperformance of FMCG stocks is attributed to their consumer-facing nature, which tends to provide a cushion during market volatility. These companies are primarily focused on domestic markets and have minimal exposure to exports, shielding them from external shocks such as trade tariffs or sanctions.
In contrast, the pharma sector—another typically defensive play—continued to face selling pressure for the second consecutive day.
This followed concerns that the US might impose tariffs on pharmaceutical imports from India. Currently, Indian drug exports to the US enjoy a tax-free status, while pharmaceutical imports from the US into India are subject to a 10 percent tariff.
The Trump administration’s tariff rhetoric has raised alarms among Indian pharma companies, many of which are in a 'wait and watch' mode. Industry players have also flagged the challenges and rising costs associated with setting up manufacturing operations in the US, which could become necessary if trade restrictions are enforced.
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