Fast-moving consumer goods (FMCG) stocks, coupled with other geopolitical concerns, weighed on the benchmark indices on Monday, leading to a decline for the second straight session. After a range-bound trading session, the Sensex closed at 81,508.46, down by 200.66 points or 0.25%. Similarly, the NSE’s Nifty 50 ended lower at 24,619, falling by 58.80 points or 0.24%.
FMCG stocks witnessed heavy selling pressure after Godrej Consumer Products (GCPL) raised concerns about its volume growth and margins. On Friday, after market hours, GCPL announced a business update for the third quarter of the current financial year. The company said it expects flattish underlying volume growth and mid-single-digit sales growth for the December quarter. Additionally, the current inflationary environment has put pressure on margins due to rising palm oil prices, it said.
GCPL’s shares fell by around 9%, marking their biggest single-day drop since March 2020, closing at Rs 1,126.50 on the NSE. It was the top loser among Nifty FMCG index members. “This is a significant negative surprise,” said Arnab Mitra, an analyst at Goldman Sachs. Mitra cut the company’s target price from Rs 1,500 to Rs 1,375, while maintaining a “buy” rating, according to a Bloomberg report.
GCPL’s update is likely to add to investor concerns about the FMCG sector as a whole, which has been facing a slowdown, said Vivek Maheshwari, an analyst at Jefferies, in the same Bloomberg report.
Apart from GCPL, other FMCG stocks such as Tata Consumer, Marico, Hindustan Unilever (HUL), and Dabur also witnessed declines of over 3% each. Barring one, all members of the Nifty FMCG index turned into losers, making it the top loser among sectoral indices. Tata Consumer, HUL, and Nestlé India were also among the top 5 Nifty losers.
In addition to FMCG, other major sectoral losers included media, auto, oil and gas, and pharma stocks. On the other hand, capital goods, metals, and industrials were the top gainers.
The broader market showed a positive breadth, with 2,296 stocks advancing against 1,774 decliners. Both the BSE Midcap and BSE Smallcap indices ended higher, with returns of 0.32% and 0.46%, respectively.
Investor wealth rose marginally by Rs 4,145 crore to Rs 459.33 lakh crore.
Foreign portfolio investors (FPIs) were net buyers, purchasing shares worth Rs 724.27 crore, while domestic institutional investors (DIIs) were net sellers, offloading shares worth Rs 1,648.07 crore on Monday, according to provisional data from the exchanges.