Mostly. That’s because everyone would be buying food and consumer goods, medicines on daily basis irrespective of market condition.
Not Consumer Durables but Consumer Staples are Defensives.
Consumer Durables-Auto,Jewellery,White goods(AC.TV,Mobile etc.)
Consumer Staples-Food, Soap,Paste etc .....
Interms of Market:
Practically there are no Defensives..Every stock will go down when Market Melts,only in the Short term and the time of Uncertainty Defensives Work.
Ex: HUL came down from Rs.300 level to Rs.180 in 2008 meltdown
Interms of Economy:
When economy is not good for prolonged period FMCG's Margins will go down.
EX:Staple Companies Margin will come down when world economy is melting down.
Pharma,FMCG,Food,Realty are EVERgreen.
Mostly, now when sector is falling, Pharma & FMCG behaves king in a market.
Analogies: The more you eat, (FMCG), and nobody can stay without food, and the more you gonna fall ill (Pharma), also at the time of natural disaster/calamities..Very simple and ideal approach.
But in 2008 HUL was never at rs 300 level it was at 240 levels…
My Point is there are no Perfect Defensive in Principle. you can take FMCG sector as a whole for analysis.It will outperform for sure but It won’t go up.
HUL-Jan22-2008 it made a low of 169 from Rs.240 (it was around Rs.300 on 2006 May-I had analysed the Market from 2006 to 2009 for a Project I had taken that Number from that)