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

Stocks of fast moving consumer goods (FMCG) companies have taken it on their chin thus far in calendar year 2026 (CY26) with the Nifty FMCG index falling nearly 6 per cent during this period as compared to 0.8 per cent dip in the Nifty 50. 

 

The underperformance has been driven by a sharp fall in ITC stock that has tanked 20 per cent in CY26 to Rs 317 levels now. From a 52-week high of Rs 444.2 hit on 27 May, 2025 on the NSE, the counter has skidded nearly 29 per cent till date.

 

Radico Khaitan, Varun Beverages, Emami, Patanjali Foods and Tata Consumer are the other key losers in CY26 that lost up to 16 per cent on the NSE, ACE Equity data shows.

 

 

The road ahead for the sector, according to G Chokkalingam, founder and head of research at Equinomics Research, could be rough terrain as companies grapple with tepid volume growth despite a few good years of good monsoon and healthy food grain production, but slowing consumption patterns.  

 

ITC, he believes, is likely to outperform most FMCG stocks and has a price target of around Rs 380 levels for the counter in 2026 – up nearly 20 per cent from the current levels.

 

“The punishment given by the markets to ITC stock post the tax hike on cigarettes has been more than what it deserved. Its other businesses are on a stable footing, and cigarette volumes should pick up over time,” he believes.

 

Brokerages such as Axis Securities, Elara Capital and Systematix have a hold/accumulate rating on the counter despite the recent developments. 

 

“We cut our earnings estimates by 12.1 /13 per cent for FY27E/FY28E, respectively to factor in the impact of tax hike on the cigarettes business. Expect EBIT CAGR for the cigarette business at -3.3 per cent in FY2 6E -28E due tax increase,” wrote analysts at Elara Capital in a recent note on ITC.

 

HUL’s exceptional gain

 

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

 

Excluding exceptional items, profit after tax grew 1 per cent at Rs 2,562 crore in the December 2025 quarter. The company also reported a one-time exceptional cost of Rs 113 crore due to implementation of the new labour codes.  On a consolidated basis, however, the reported net profit stood at Rs 6,607 crore. Excluding exceptional items, profit after tax (PAT) at ₹2,562 crore grew 1 per cent year-on-year. Its underlying volume growth stood at 4 per cent in the quarter. Net sales grew 5.6 per cent in the quarter ended December to Rs 16,441 crore, the company said. READ MORE ABOUT IT HERE  The stock slipped nearly 3 per cent on the NSE following the development to hit an intra-day low of Rs 2,383.10 levels.

 

Remain selective

 

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

 

“Profit margins of companies should improve as input cost pressures ease. However, they need to keep a check on advertising & promotional expenses and discounts. Remain positive on Britannia, Nestle, Hindustan Unilever (HUL), ITC, Godrej Consumer, Tata Consumer, Dabur and Marico. Expect 12 – 15 per cent upside in these stocks in the remaining part of 2026,” he said. 

 

Ambareesh Baliga, an independent market expert, suggests investors remain selective as regards FMCG stocks and buy only where there is earnings visibility.

 

“Over the next two – three quarters, urban and rural demand is likely to pick up. That apart, management commentary during Q3FY26 numbers has not been too bad. Among the lot, Dabur, Emami and Marico look good for 18 – 20 per cent upside from here in the remaining part of 2026 provided the economic growth remains supportive. ITC is a contrarian buy at the current levels,” he said.