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Our Bureau

Mumbai, Sept. 25 As the markets remain choppy investors seem to be taking cover in defensive shares such as the FMCG sector. While the Sensex has tanked close to 7 per cent in the past month, the FMCG index has slipped just 0.74 per cent.

“In a falling market it is quite common for investors to stick to defensive sectors like the FMCG and pharma sectors,” said an analyst at a stock broking firm.

ITC and Hindustan Unilever Ltd, the shares that are among the 30 Sensex stocks, have gone up 2.7 per cent and 2.32 per cent respectively in the last one month.

ITC and Hindustan Unilever have a combined weightage of 74 per cent in the FMCG index.

Though the other shares in the FMCG index may have dipped during this period, most of them have still managed to outperform the benchmark index — Sensex.

Colgate has dipped 5.75 per cent; Dabur has slipped 3.28 per cent, Marico shed 0.41 per cent, Nestle fell by 5.84 per cent, Tata Tea dropped 4.05 per cent and United Spirits slipped 1.54 per cent.

In a week though, shares such as Colgate, Godrej, Hindustan Unilever, Marico and United Breweries have gone up between 4 and 9 per cent, while the Sensex has gone up 1.74 per cent.

“With the commodity prices declining it is expected to impact the profits of the FMCG sectors like never before and lead to better margins,” stated a recent report by Parag Parikh Financial Advisory Services.

“Our investment preference is towards players who have maintained market dominance with rising competition and have a strong product portfolio with strong pricing power. Among large caps, our preference is towards Nestle due to its quality growth at premium valuations and Hindustan Unilever which maintains momentum against all odds. Colgate, Marico and Dabur in the mid-tier,” stated an Enam Securities report.

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