Is It Worth to Invest In Consumer Stocks?

India’s Nifty FMCG, or Nifty Fast Moving Consumer Goods Index, has experienced steady growth. In fact, in 2023, Nifty FMCG crossed the benchmark and jumped by 25%. As a result, there has been an increasing interest in investing in consumer stocks. However, deciding whether it’s truly a worthwhile investment depends on numerous factors such as economic trends, market conditions, and individual risk tolerance. This article will help you with the same. 

Investing in Nifty FMCG Index

Let us dive into an analysis and performance review of the Nifty FMCG Index, exploring key trends, market dynamics, and insights into the Fast Moving Consumer Goods sector’s trajectory.

  • Overall Growth of the FMCG sector in India

The FMCG sector in India has witnessed significant growth and is expected to reach a value of $615.87 billion from 2021 to 2027 with a CAGR of 27.9%, according to a report by IBEF. This growth can be attributed to a growing population, rising incomes, and shifting consumer preferences. Concurrently, the Indian FMCG industry witnessed significant growth in Q4-2023, characterized by a 6% increase in overall value, largely attributed to a robust 6.4% expansion in volume.

With this, investing in consumer stocks has become lucrative, especially given the robust performance of the NIFTY FMCG Index. At present it is trading around currently priced at INR 54290.

  • Rising Competition in FMCG

Due to various new entrants in the market, the FMCG sector has become highly competitive lately. To name one, a company like Patanjali promoted by Baba Ramdev, a Yoga Guru has grown by bounds and leaps to become a popular name in the Indian Market.

ALSO READ  LABOR MARKET UNCERTAINTY SURGES CRYPTOCURRENCY SALARY IDEAS

This has resulted in the overall growth of the FMCG sector. As new players enter the market, it fuels competition and results in competitive pricing for customers and quality enhancements.

  • Performance of the Nifty FMCG Index

Throughout 2023, the Nifty FMCG index showcased remarkable resilience, surpassing the benchmark index with an impressive 25% surge, contrasting the Nifty’s 18% rise. This uptrend was fueled by encouraging signs of rural recovery, a moderation in inflationary pressures, and enhancements in gross margins within the fast-moving consumer goods (FMCG) sector. 

If you wish to analyze Nifty FMCG, you can use TradingView Desktop, which provides advanced charting tools and technical analysis indicators to help you with the analysis of the Nifty FMCG chart as below.

Conclusion

The Nifty FMCG Index has showcased robust growth, which reflects the resilience and potential of India’s consumer goods sector, driven by factors like population growth, rising incomes, and evolving consumer preferences. However, the sector also faces increasing competition, highlighted by the rapid rise of companies like Patanjali. 

Investors considering the FMCG sector should conduct thorough analysis using tools to gauge market trends, economic conditions, and individual risk profiles before making investment decisions. 

If you wish to access the TradingView platform for free, open an account with Dhan. Dhan has integration with this platform, which allows its users to access and use TradingView without any additional cost.