FMCG, IT and Pharma sector shares, generally considered safe in continuous selling in the market, are also unable to provide relief to investors. The performance of these three areas has also been weak in the market, which has reduced their weight in the Nifty 50 index. The total load in the Nifty 50 of these three areas, which is considered defensive, has come down to 25.3 per cent, which is the lowest in 15 years. In the end of March last year, these loads were 27.4 per cent and 37.6 per cent in March 2014. Earlier in March 2010, the load in the index of these sector was at the lowest level of 22.4 per cent.
The weight of the FMCG region is reduced to 9.5 per cent from 160 basis points as compared to March 2024. Similarly, the weight of the pharma sector has come down by 70 basis points to 3.1 percent. The performance of the IT service sector has been relatively better and its weight in the index has increased by 20 basis points to 12.7 per cent. From the beginning of 2025, the performance of these three regions has been weaker than the widespread market. The Nifty Pharma Index has come down 14 per cent so far in 2025. The Nifty IT 12.1 per cent and the Nifty FMCG declined by 9.7 per cent. So far this year, the Nifty has come down 5.5 percent.
Banks, Finance and Insurance (BFSI) companies have benefited from decreasing the weight of the sector considered defensive. In the Nifty 50, BFSI’s weight has increased by 480 basis points to 35.4 percent in the last one year. From 20 years
This is the first time in a long time when shares of defensive areas are also beaten at the time of decline in the market. Often the defensive sector performs better in the falling market and is considered safe for investors who want to secure their capital from a sharp fall in banking and finance, mining and metal, capital goods and vehicles.
When the market increases, shares of cyclical regions fill up. For example, the defensive area was successful in performing well at the time of Selling at the time of Kovid-19. Between March 2019 and March 2020, the area’s weight in the index increased by 500 basis points, while the Nifty 50 declined by 26 per cent during that time. Similarly, the performance of the region was better than the overall market in the 2012 selling due to euro-skeleton and the decline in the time of global financial crisis in 2008. In FY 2012, the area’s weight in the index increased by 220 basis points, while the Nifty fell by 9.2 per cent. In FY 2009, the weight of the defensive sector increased by 600 basis points, while the benchmark index declined by 36.2 per cent.
This contrast cyclic relationship between the defensive regions and the stock market now seems to be broken and the region is behaving in the same way during the recession of 2000 to 2003. Between March 2000 and March 2003, the area’s weight in the index declined 420 basis points, while the Nifty 50 declined by 36 per cent during that time.
Analysts say this unusual behavior of defensive shares suggests that the current decline in the stock market is different from the previous declines. G Chokalingam, founder and CEO of Equinomics Research, said, “Protection of defensive shares suggests that FMCG and IT sector now have pressure on their margin with an income increase of one point. The export oriented pharma region is facing trouble with Trump’s fee. In the past, there was a decline in the market due to the selling of foreign investors due to widespread global reasons.
First Published – March 5, 2025 | 11:04 pm IST