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The 14-day fall has wiped out ₹2.7 lakh crore in investor wealth, indicating that the rally post the Union Budget announcements with regards to personal income tax was short-lived, as the focus shifts back to weak demand and margin pressures.
Despite the initial optimism, the Nifty FMCG index is down 11% during this 14-day losing streak, which began on February 3.
While the cigarette major, ITC Ltd. has witnessed the steepest fall of ₹77,600 crore in the last in the last 14 sessions, Hindustan Unilever Ltd. (HUL) has seen its market capitalisation decline by ₹64,500 crore during the same period to ₹5.2 lakh crore. Other consumer companies like Nestle India and Varun Beverages have lost ₹12,400 crore and ₹30,000 crore, respectively.Among the index constitutes, stocks of Varun Beverages and Colgate-Palmolive India have plunged 16% each in the last 14 sessions. That is followed by Radico Khaitan, ITC and Godrej Consumer Products
with each having declined 14% to 15% during the same period.
According to Nielsen IQ data, smaller FMCG companies outperformed their larger counterparts, having seen volume growth between 8% to 10% during the quarter that ended in December 2024. In comparison, FMCG giants reported sales volume growth between 0% to 5% during the same period.
Market participants are of the view that the inflation view of the Central bank and its neutral monetary policy stance have dampened hopes of further rate cuts. The Reserve Bank of India on Friday (February 7) lowered the policy rate by 25 basis points to 6.25% with Consumer Price Index (CPI) inflation for the current financial year projected at 4.8%.
Alos read: Consumer stocks give up budget day gains as inflation continues to hurt margins
For instance, during its December quarter earnings call, Britannia Industries highlighted that it faced an 11% inflation rate in the basket of commodities it purchases, primarily driven by refined palm oil and cocoa. The company stated that to offset this impact, it would need to implement a 6.5% price increase.
The Nifty FMCG index is currently trading at 51,943.25 in Thursday’s trade (February 20), down nearly 1% from the previous close.
First Published: Feb 20, 2025 9:58 am IS
