Yes, there is a sector which will remain untouchable even in a severe economic crisis. The sector’s name is Fast Moving Consumer Goods (FMCG). Apart from FMCG goods, which ever sector you choose is prone to a shut down or saturation at some of time in immediate, medium or far future. But for FMCG goods, saturation or shut down can never be possible. Yes, one may argue about slowing demand and supply.
So why is this sector untouchable?
The answer is simple. It is because the business of FMCG goods is wholly depended on the people of India. Moreover, FMCG products have penetrated so deep in the Indian markets that it is sold in almost every shop in India. Almost anything which we consume (and sometime use) on a daily basis is an FMCG product.
Every sector which is traded on the stock market is depended on various internal and external factors. These factors include foreign policies, government policies, international crude prices, geo-political tensions, recessions, currency fluctuations, wars etc.
But FMCG stock is not depended on anything. It only depends on one thing, the taste of the consumer. That’s it. If the consumer likes what it uses, demand will remain sustainable; if not demand will fall.
Continuous demand in the FMCG companies ensures regular cash flows and revenues, which ensures steady flow of profits and thus, dividends.
That why it is very important for you to invest in an FMCG company. In comparison with others, FMCG stock price will remain stable and thus will protect your invested capital, which otherwise might have been volatile.