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We expect stocks of fast moving consumer goods companies to outperform the market on the back of a good monsoon, and higher predictability of earnings compared with other sectors. While a better-than-expected monsoon will definitely help FMCG companies, the fact that earnings of FMCG stocks are far more predictable that other sectors is a big positive. Pharma is also considered a defensive sector, but due to various issues like penalties and drug recalls it is increasingly difficult to predict their earnings. In an environment where companies from other sectors are witnessing large fluctuations in their earnings due to regulatory factors and currency headwinds, FMCG stocks will continue to do well as they offer much needed stability to investors in a volatile market.
