Why FMCG stocks are considered a defensive investment

What Are Defensive Investments?

– Defensive investments are assets that remain stable during economic downturns.
– FMCG stocks are a prime example, offering resilience and steady returns.

Essential Nature of FMCG Products

– FMCG companies produce essentials like food, beverages, and personal care items.
– These products see consistent demand regardless of economic conditions.

Consistent Cash Flows

– FMCG companies have robust cash flows due to high product turnover.
– Stable revenues translate into dependable dividend payouts for investors.

Resilience During Economic Downturns

– While other sectors may face steep declines, FMCG stocks tend to remain stable.
– Companies like Hindustan Unilever and Nestlé India thrive even during recessions.

Long-Term Growth Prospects

– FMCG stocks offer consistent growth backed by expanding urban and rural markets.
– Ideal for conservative investors looking for low-risk, long-term returns.