The Nifty FMCG index declined 2.36% during Monday's trading session, significantly underperforming the broader market. According to The Financial Express, the FMCG index was down 2.36% compared to a 0.70% decline in the benchmark Nifty 50. All 15 constituents of the FMCG index extended their declines, with the sector facing pressure from multiple headwinds including MSCI Global Standard Index rebalancing and deficient monsoon forecasts. Over the past one month, the FMCG index has underperformed the market by falling 6.08%, while the Nifty 50 declined by only 2.84% during the same period.
Several major FMCG companies experienced significant declines, with ITC, Hindustan Unilever (HUL), Tata Consumer Products, Colgate Palmolive and Godrej Consumer Products falling in the range of 2% to 5%. As reported by The Financial Express, ITC shares hit a fresh 52-week low of ₹278.30 on the NSE, ending Monday's trade 2.5% lower after falling for a second straight session. ITC shares have corrected 34% from its 52-week high of ₹428.55 on June 10, 2025, and have declined over 33% over the past year and 23% so far this year. The company's cigarette business continues to bear the brunt of the revised GST structure on tobacco products.
ITC is extending sharper declines as the company continues to bear the brunt of the revised GST structure on tobacco products. Effective February 1, 2026, the government replaced the Compensation Cess with a revised tax structure, raising GST from 28% of the transaction value to 40% of the retail sale price, alongside a sharp increase in excise duties. As reported by Geojit Investments, Q4 margins came under pressure following the recent tax hike, as ITC opted for only a partial pass-through to consumers in order to protect volumes. The cigarette segment continues to be a key contributor to ITC's profitability, with the company noting that the changes significantly affected the comparability of its financials, making gross revenue and excise duty figures for Q4 and FY26 not directly comparable with the corresponding period last year.
Weaker monsoon forecasts have significantly impacted overall sentiment, with investors remaining cautious about ITC's near-term earnings outlook. The company, which manufactures agricultural products and relies heavily on rural demand, faces additional pressure from weather-related concerns. According to The Financial Express, the entire FMCG basket is under pressure due to unfavorable sector-specific cues, with recent earnings also being less than encouraging, which has weighed on investor sentiment. Despite the current challenges, analysts at Geojit Investments noted that ITC has historically demonstrated strong pricing power in navigating regulatory challenges, and the current valuation remains below long-term averages, offering downside support.
Dabur India's share price slipped 4% to ₹426.10 on the NSE in intra-day deals following US Food and Drug Administration (USFDA) concerns. According to the latest FDA inspection report, the regulator has flagged serious manufacturing, maintenance and data integrity lapses at Dabur India's manufacturing facility in Dadra and Nagar Haveli following an inspection conducted in January 2026. The FDA identified multiple deficiencies including lapses in equipment cleaning, maintenance and quality control procedures, with inspectors finding a live bird and bird droppings inside a raw material warehouse located close to packaging materials. The agency also observed an unidentified black substance covering large portions of ceiling surfaces in raw material and finished product storage areas, and raised concerns regarding the reliability of microbiological testing carried out at the plant. However, Reuters reports indicate the FDA has accused the plant of creating 'fraudulent' records to conceal manufacturing operations, with certain critical manufacturing records falsified to conceal that equipment designated for specific products had been used for multiple other products.
