New Delhi, March 24 -- The fast-moving consumer goods (FMCG) sector is usually touted as a defensive play, given its non-cyclical nature as these companies sell essential goods. Small wonder then that FMCG stocks are usually able to beat the returns of the benchmark Nifty50 index. But the sector has been unable to shield investors from stock market turmoil this time around. The Nifty FMCG index has fallen 19% in the past six months while the Nifty50 is down just 9%.

The fizzling out of urban consumption is a pain point that has weighed on the FMCG index. Demand challenges in the urban market, estimated to contribute around 60% of the industry's revenue, are unlikely to wane soon. This, coupled with lingering margin pressure, has been pro...