ITC, Nestle, other FMCG stocks drop up to 2%, extend losses to second day after 3-day rally

Nifty FMCG

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26 Aug, 2025 12:21

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The shares of major FMCG companies dropped on August 22, pushing the Nifty FMCG index down for the second consecutive session. This comes after the stocks recorded strong gains for three consecutive sessions on optimism over prospective GST reforms.

Nifty FMCG index was down 1 percent to stand at 55,742.05, as seen at 1:05 pm. The index had gained nearly 4 percent between August 18 and August 20, after Prime Minister Narendra Modi hinted at the next generation of Goods and Services Tax (GST) reforms to be announced as a Diwali gift for consumers.

Investors may have then resorted to profit booking after the strong spike in the sector. The Nifty FMCG index has dropped over 1.6 percent in two sessions.

ITC and Colgate Palmolive shares dropped nearly 2 percent each, while Nestle India and Marico shares were down over 1 percent. Emami, United Breweries (UBL), Hindustan Unilever (HUL) and Britannia Industries shares were trading in the red with marginal losses.

Bucking the trend, Varun Beverages, Tata Consumer Products, Radico Khaitan and Dabur shares were trading in the green with marginal gains, while Godrej Consumer Products were up more than 1 percent.

In its latest report, Axis Securities noted that the FMCG sector r delivered modest single-digit topline growth in Q1FY26, largely driven by price hikes and improving sentiment in select urban pockets. “Unseasonal rains weighed on summer-led categories like beverages and glucose. Nonetheless, management commentary across companies reflects optimism, with most anticipating volume recovery over the next 2–3 quarters, supported by easing inflation and improving macro indicators,” the brokerage said.

Axis Securities noted that urban markets, which contribute to nearly 50-60 percent of total FMCG sales, continue to face headwinds due to muted wage growth, higher EMIs, and stiff competition from emerging distribution formats like D2C and Q-commerce. However, rural demand remains robust despite macro headwinds.

“Looking ahead, we maintain a constructive outlook for the FMCG sector. With rural inflation easing, higher MSPs, healthy monsoon projections, and increased government spending, we expect rural consumption to remain a key growth lever. Moreover, the upcoming quarters—particularly H2FY26 are expected to bring about a more broad-based volume recovery, fueled by seasonal tailwinds, improved consumer sentiment, and monetary policy support,” it added, while naming Varun Beverages and DOMS Industries as its top picks in the sector.

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