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Further correction could make the FMCG sector valuations attractive

FMCG growth is tied to semi-urban and rural demand. Metro and large city demand is almost saturated. Growth comes from smaller places

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Devangshu Datta

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The FMCG sector has underperformed the Nifty over the past year as its 20 per cent return is trumped by 29 per cent of the benchmark index. The FMCG index saw a 2.2 per cent drop in the last session, while the Nifty lost 1 per cent. FMCG is seen as a defensive segment. The demand for staples like personal care products, groceries and snacks tend to be stable. FMCG companies are consistent dividend-payers.

The underperformance (though there were nominal share price gains in the past year) is linked to the slow consumption demand. This ties into the narrative of

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