Indian consumption sector's defensive shield cracks — can this rare 20% slide unlock an entry point? Motilal Oswal weighs in

consumption sector, traditionally seen as a defensive haven during market volatility, is in the midst of a rare and sharp underperformance — with the Nifty FMCG and Nifty Consumption indices down about 20% and 17% from their September 2024 peaks, respectively. While the sector has lagged the broader market in recent months, Motilal Oswal sees this slump as a selective buying opportunity, driven by an expected demand recovery and easing inflation that could set the stage for a rebound.

The consumption sector's underperformance— nearly 900-600 basis points below the Nifty100 — creates compelling entry points in select names, Motilal Oswal said, highlighting Page Industries, Devyani International, Metro Brands, V-Mart, Lemon Tree Hotels, LT Foods, and Cello World as key stock picks with strong fundamentals and growth potential.

The brokerage noted that the current weakness marks a stark deviation from historical trends, where consumption indices have typically outperformed the benchmark during sharp market corrections. Over the past two decades, the Nifty FMCG and Nifty Consumption indices have delivered average alphas of 10% and 5%, respectively, during 11 instances of a 10% or more fall in the Nifty. The ongoing underperformance, Motilal Oswal said, is largely driven by weak FY25 earnings, with its covered consumption universe expected to post just 2% year-on-year profit growth.

“This is an aberration from historical trends, as consumption indices typically outperform the benchmark during phases of sharp market