Nifty FMCG index tanks 6% in 2026; analysts remain selective on stocks | Markets News

Stocks of fast-moving consumer goods (FMCG) companies have remained struggling so far in calendar year 2026 (CY26); The Nifty FMCG index fell nearly 6 per cent during this period compared to a 0.8 per cent decline in the Nifty 50.

The underperformance was due to the sharp decline in ITC shares, which fell 20 per cent to Rs 317 levels in CY26. Since its 52-week high of Rs 444.2 on the NSE on May 27, 2025, the counter has lost nearly 29 per cent till date.

Radico Khaitan, Varun Beverages, Emami, Patanjali Foods and Tata Consumer were the other major losers in CY26, losing up to 16 per cent on the NSE, according to ACE Equity data.

According to G Chokkalingam, founder and head of research at Equinomics Research, the road ahead for the industry may be bumpy terrain as companies grapple with moderate volume growth despite a few years when monsoon rains were good and healthy food grain production was good but consumption patterns slowed down.

He believes ITC will outperform most FMCG stocks and has a price target of around Rs 380 for the counter in 2026, up around 20 per cent from current levels.

“The penalty that the markets have inflicted on ITC shares after the tax hike on cigarettes has been more than it deserves. The company’s other businesses are on a stable footing and cigarette volumes should increase over time,” he thinks.

Brokerage firms such as Axis Securities, Elara Capital and Systematix have an over-the-counter hold/accumulate rating despite the latest developments.

“We have lowered our earnings estimates by 12.1/13 percent sequentially for FY27E/28E to account for the impact of tax hike on the cigarette sector. For cigarette sector, we expect EBITDA CAGR of -3.3 percent due to tax hike due FY2 6E-28E,” Elara Capital analysts wrote in a recent note on ITC.

HUL’s extraordinary earnings

Hindustan Unilever (HUL) on Thursday reported a net profit of Rs 7,075 Crore for the October-December 2025 quarter of fiscal year 2026-27, up 136 per cent year-on-year, but including a one-time gain of Rs 4,516 Crore from discontinued operations following the demerger of its ice cream business.

Profit after tax, excluding exceptional items, increased by 1 per cent to Rs 2,562 billion in the December 2025 quarter. The company also reported one-time exceptional costs of Rs 113 billion due to the implementation of new labor laws.

However, the net profit reported on a consolidated basis stood at Rs 6.607 billion. Excluding exceptional items, profit after tax (PAT) at ₹2,562 crore rose 1 per cent year-on-year. Underlying volume growth stood at 4 percent in the quarter. Net sales rose 5.6 percent to 16.441 billion rupees in the quarter ended December, the company said. READ MORE ABOUT IT HERE

Following the development, the stock lost nearly 3 per cent to hit an intraday low of Rs 2,383.10 on the NSE.

Stay selective

As a strategy, Gaurang Shah, chief investment strategist at Geojit Investments, remains selectively bullish on FMCG stocks on the back of likely improvement in semi-urban and rural demand.

“As input cost pressures ease, companies’ profit margins should increase. However, they need to control advertising and promotional spend and discounts. Stay positive on Britannia, Nestle, Hindustan Unilever (HUL), ITC, Godrej Consumer, Tata Consumer, Dabur and Marico. We expect a 12-15 percent increase in these stocks in the remaining part of 2026,” he said.

Independent market expert Ambareesh Baliga advises investors to remain selective about FMCG stocks and buy only where gains are visible.

“In the next two to three quarters, urban and rural demand is likely to pick up. Apart from this, management comments during the 3FY26 numbers have not been too bad. Provided economic growth remains supportive, Dabur, Emami and Marico, among others, look good for 18 to 20 per cent upside from here in the rest of 2026. ITC is a contrarian buy at current levels,” he said.