BE AGGRESSIVE ON DEFENSIVE

In an uncertain and volatile market, FMCG sector with strong return ratios, higher dividend yield ensures long-term capital preservation.

AS the union election approaches, stock market volatility is expected to rise, reflecting the anticipation surrounding the world's largest democracy determining its future government for the next five years. With the 2024 elections mere months away, we are familiar with the excitement and anticipation that accompany such events. The election outcome will profoundly impact both the Indian stock markets and the broader economic landscape.

Indian Eco Defensive Bet During Volatile

Period Investors seeking stability amid market volatility often turn to FMCGs (Fast Moving Consumer Goods), known for their defensive nature. FMCG products encompass four main categories: Food and Beverages, Personal Care, Healthcare Goods, and Home Care Commodities. These items, such as pasta and shampoo, exhibit high turnover rates and are widely consumed. Given their essential nature, FMCGs, including healthcare products and cleaning supplies, tend to maintain stable demand even in uncertain times.

One of the measures that we take to understand their stability is beta. The Nifty FMCG index has a low beta, meaning it's not as responsive to market cycles as the NIFTY 50 index, the benchmark index. Each security in NIFTY FMCG has a beta rating of less than 1. The table given here clearly shows the beta of Nifty FMCG against Nifty 50. Additionally, FMCG companies are reliable dividend payers, further bolstering their appeal to investors and also further provides stability.

Returns: Revert to Mean