The BSE FMCG index in the last 11 sessions has surged over 25 per cent outpaced the standard Sensex, which gained 20 per cent during the same period. The shares of Zandu balmand other healthcare products,Emami Limited has gained over 50 per cent since 24 March 2020.

Shares of Godrej Consumer Products Ltd (GCPL), which manufactures soaps, toiletries and detergents, have surged about 33 per cent during the said period. With a wide portfolio of products ranging from tea, coffee, salt, pulses, spices and others, Tata Consumer Products Limited’s share price has risen by 36 per cent.

The share price of Tata Consumer Products Ltd – which has a wide portfolio of products ranging from tea, coffee, salt, pulses, spices – has gone 23 per cent higher.

This sudden rally in the FMCG stocks can be accredited to panic buying as consumers are stocking up on food and beverages and other essentials, amidst the fears of extended lockdown.

“FMCG companies have always performed well during challenging times and therefore are a natural defensive bet in the market,”Abneesh Roy, senior vice president at Edelwiss Securities said.

“People are staying at home and are worried about how long this lockdown will go on. So, depending on their buying abilities, they are stocking up. This has accelerated the demand for items under foods and beverages and other essentials that are not only covid-19 related hygiene products. Also, for the FMCG companies, there are no big concerns on the availability of raw materials,” Roy explained.

“FMCG companies are the biggest advertisers in the market and the collapse of the advertising rates during this period also augurs well for these companies,” Roy added.

“On the balance sheet side as well, these companies are cash-rich, debt free and have strong cash flows from operations, which help them to tide over the downturn. All these factors put together are leading to buying interest in the FMCG space,” Ajit Mishra, VP – Research, Religare Broking said.

“Another concern for the FMCG companies is an expected fall in consumption demand as liquidity dries up at the customer end, especially for the poor and underprivileged such as daily-wage workers,” said Religare’s Mishra.

“Several FMCG players are running at low capacity – 20-30 per cent due to shortage of workers. ITC has put its cigarette manufacturing on hold while it continues to produce goods of essential items like flour, biscuits and snacks, soaps and sanitizers, among others,” Mishra added.