FMCG

Of the many sectors in India, FMCG or Fast Moving Consumer Goods is the most vibrant, growth-oriented, and relatively recession-proof. FMCG is also referred to as Consumer Packaged Goods or CPG. The FMCG sector is India's fourth-largest sector. The Nifty FMCG index is an accurate indicator of consumer sentiments in India. If the FMCG index goes up, it indicates strong consumer demand for consumption and vice versa. This article explains FMCG sector stocks in detail and contains information about the best FMCG stocks to invest in for good returns in 2022.

What are FMCG Stocks?

FMCG or Fast Moving CoFMCG stocks earn 55% of revenues from urban consumers and 45% from rural consumers. However, there has been a steady growth of consumer demand in rural areas primarily due to an improvement in the distribution channels of the manufacturing companies of FMCG goods. Although the COVID-19 caused supply disruptions in many areas, that is a thing of the past and the FMCG sector is poised for steady growth.

What is the Future of FMCG Sector Stocks in India?

The FMCG sector is a relatively recession-proof sector in India. While during a financially challenging period, people may avoid buying luxury goods and control unnecessary expenses. But, they cannot refrain from buying FMCG goods, such as soaps, sanitisers, shampoo, packaged foods, etc. So, FMCG sector stocks stay assured about customer demand irrespective of the country's prevailing macroeconomic situation. Moreover, since the Household and Personal Care segment carries a 50% weightage in the FMCG sector, companies remain certain about business. 

Traditionally, FMCG sector stocks in NSE have delivered lower returns than other sectors like Information Technology, Banking & Financial Services, Engineering, etc. But, FMCG stocks are more stable than the sectors mentioned above. Since the volatility in FMCG stocks is considerably lower than in other sectors, first-time investors prefer investing in these stocks to minimise the chances of capital loss. In addition, most high-quality FMCG stocks issue dividends regularly. Dividends create an extra earning opportunity for investors. Hence, FMCG stocks present a viable and stable alternative to high-risk stocks in the capital market.

The Top 10 Best FMCG Sector Stocks to Invest in 2022