The S&P FMCG index was down more then 2 per cent in trade. Shares of ITC were the worst hit and the stock was down 3%, while Hindustan Unilever was down more then 1% and Colgate crashed almost 3%.

Among the other stocks that lost ground from the sector were Dabur and Godrej Consumer.

FMCG stocks have been the darling of foreign institutional investors (FIIs) in the last few months, as investors have looked to hide in defensives. FIIs have been buying these stocks as they tend to perform relatively better even in weak economic conditions.

However, analysts have warned that stocks from the sector are heavily over priced, making them vulnerable to more downside. Investors have been willing to pay significantly higher price to earnings and price to book value multiples for these stocks.

Shares of Hindustan Unilever fell earlier this week as investors worried over volume growth at the company.

GoodReturns.in