ITC, HUL, other FMCG stocks rise as defensives gain traction; here's what brokerages say

FMCG

The Nifty FMCG index remained in the green for the second consecutive session on February 25. The index rose 0.58 percent to stand at 52,587 as several stocks rallied.

The FMCG stocks had shown resilience on February 24. Despite market decline, the Nifty FMCG index closed in the green at 52,286. The index has continued its upward trajectory on February 25, suggesting investor interest in defensives during a market downturn that is extending to fifth straight month.

The shares of Colgate Palmolive were the top gainer on the index, rising over 2 percent to trade at Rs 2,527 apiece. The stock was followed by Godrej Consumer Products shares, which rose 1.56 percent to trade at Rs 1,061 apiece. The other stocks which recorded gains included Nestle India, ITC, Radico Khaitan, Dabur, Hindustan Unilever (HUL), Tata Consumer, Britannia Industries, United Spirits and United Breweries.

However, few of the stocks bucked the trend to trade in the red. Varun Beverages shares crashed over 3 percent to trade at Rs 483 apiece, while Balrampur Chini Mills shares fell nearly 2.85 percent to trade at Rs 456 apiece. The shares of Marico and Procter & Gamble Hygiene and Health Care traded with minor losses.

Here's what brokerages are saying about the sector that found a fillip in income tax cuts in Budget 2025 to boost consumption:

'FMCG stocks a stable investment option'

Axis Securities said FMCG sector's "structural growth trajectory remains intact, as several FMCG categories such as shampoos and premium detergents are still under-penetrated and underserved, particularly in rural markets".

"FMCG companies deliver best-in-class return ratios, including high ROCE, ROE, and dividend yield, making them a defensive yet rewarding investment choice in a volatile market environment. The ability to generate strong cash flows and return capital to shareholders makes FMCG a stable investment option amid macroeconomic uncertainties," the brokerage said. It gave a 'Buy' call on the stocks of Varun Beverages and DOMS Industries.

Vinod Nair, Head of Research at Geojit Financial Services, on FMCG:

Vinod Nair, Head of Research at Geojit Financial Services, listed a number of factors that could act as a boost for FMCG stocks. "Global headwinds continue to weigh on the domestic market, with persistent volatility causing uncertainty among retail investors, who generally have a lower risk appetite. Weak US consumer sentiment and tariff concerns may further pressure export-oriented sectors such as IT. Looking ahead, the pace of earnings downgrades is expected to ease, supported by increased government spending, lower interest rates, and tax reductions. These factors are likely to provide a boost to sectors such as FMCG, consumer discretionary, and banking," he said.