MUMBAI: Fast-Moving Consumer Goods (FMCG) stocks or consumer staples shares are 'well positioned' for investors amid rising crude oil prices and escalating geopolitical tensions, even as the near-term outlook for the sector has weakened, analysts said in a report released on Monday.
According to a report by BNP Paribas India, the outlook for Indian consumer staples has deteriorated due to the recent spike in oil prices triggered by tensions in West Asia.
Higher crude prices are expected to push up input costs and weigh on margins in the near term, it said.
However, the brokerage noted that staples have historically outperformed during periods of oil shocks, such as in 2008, 2011 and 2022, with relatively smaller earnings cuts compared to other sectors.
"Despite the worsening outlook, stocks have been beaten down disproportionately, " the report said.
It further highlighted that most staples companies are now trading at valuations last seen a decade ago, offering improved comfort for investors.