FMCG Sell-Off Over Monsoon Fears Overdone Says Nuvama’s Abneesh Roy
FMCG stocks fall; analyst sees overdone monsoon fears recovery
Concerns over a potential weak monsoon have triggered a recent sell-off in FMCG stocks, but the correction may be overdone, according to Abneesh Roy, Executive Director at Nuvama Institutional Equities. He argued that the market is disproportionately linking recent pressure in consumer stocks to El Niño-related fears, despite limited near-term earnings impact.
Roy said El Niño concerns are unlikely to materially affect the first half of the fiscal year. “I don’t think El Niño is impacting Q1 or Q2. It will essentially impact H2,” he noted, adding that investors may be prematurely pricing in risks that are still several months away.
He added that the current weakness in FMCG shares is being driven more by foreign institutional investor selling, higher crude oil prices, and broader market sentiment rather than monsoon-related anxieties. Roy expects consumer companies to report strong performance in the near term, supported by pricing actions, government welfare spending, and steady demand trends. “My sense is Q1 and Q2 should be quite strong for almost all the consumer companies,” he said.
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Highlighting specific opportunities, Roy pointed to several FMCG and consumer-facing names that he expects to benefit in the coming quarters, including Nestle, Marico, Asian Paints, Berger Paints, Pidilite, Varun Beverages, Emami, and Dabur. He said these companies are likely to see improved operating performance driven by pricing power and demand resilience.
Roy also observed that investor behaviour has shifted toward near-term earnings visibility rather than longer-term macro assumptions. “These days people don’t bake in six months in advance. These days the near-term results are very important,” he said, underscoring the market’s focus on quarterly performance over extended outlooks.
He further divided his preferred stock picks into two categories: companies with strong growth visibility but relatively higher valuations, such as Nestle, Marico, Tata Consumer, and Pidilite; and another group offering a more attractive valuation-earnings balance, including Dabur, Colgate, and Varun Beverages. He concluded that the current correction may be offering selective opportunities rather than signalling a structural downturn in the FMCG space.
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