HUL, Britannia, Tata Consumer stocks fall up to 3%; is increasing inflation a concern?

Indian equities are trading in the red for the sixth consecutive day marred by higher inlfation pressure and continuing FII exodus. Nonetheless, gains in the select pockets inlcuding media, realty and auto pack were offset on the back of losses in the FMCG and PSU Bank stocks majorly.

FMCG stocks led the fall today emerging as the top sectoral loser, down over 1 per cent at the last count at 55.884.15. In the last week on continuing pressure across-the-board, the index has lost over 9 per cent.

Among the top constituents that led the fall over a one month period were counters like Colgate Palmolive down over 21 per cent, followd by Britannia, Balrampur Chini and Tata Consumer Products which fell between 14-16 per cent in the last one month.

Other notable losers amid the current consolidation phase are Marico, Hindustan Unilever and Nestle India having lost over 10 per cent each.

However, in today's trade, barring a few counters including Varun Beverages which traded in the green on its inclusion in the F&O trading pack, some 3 more stocks including UPL, United Spirits and Radico traded in the green with gains of up to 1 per cent.

Nonetheless, conunters such as Tata Consumer, Britannia, HUL and Colgate Palmolive were down 2 per cent each.

Atul Parakh, CEO of Bigul said, "FMCG stocks are facing significant headwinds driven by multiple challenging factors in Q2FY25. The most notable concern is the deteriorating urban demand, which accounts for two-thirds of total FMCG sales, as urban consumers become increasingly cautious with spending amid rising living costs and food inflation."

Major players like HUL and Nestle have reported disappointing Q2 results, falling below street estimates. Margin pressures have intensified due to rising commodity prices, particularly palm oil, which has been trending upward since March. While rural volumes show improvement, the stark urban-rural divide is concerning, with urban households particularly stressed by a sluggish job market and lower disposable incomes. Adding to these sectoral challenges, market sentiment remains cautious due to foreign portfolio investors reducing exposure ahead of elections, contributing to increased market volatility.