When Sentiment Shifts Before Fundamentals 📊

Market psychology often shifts before fundamentals become visible. When a sector stays underperforming for an extended period, sentiment turns extremely negative, positioning becomes light, and expectations drop to minimal levels. This creates a setup where even a small positive trigger, such as early signs of demand recovery or institutional buying, can lead to a sharp price reaction. The recent movement in the FMCG sector reflects this exact shift, where pessimism has started transitioning into cautious optimism. At the same time, such rallies are not always driven by long-term conviction. In uncertain or volatile market conditions, institutional investors tend to rotate capital into defensive sectors like FMCG due to their stable earnings and predictable demand. This creates temporary outperformance, which can sometimes be mistaken for a structural comeback. The key is to differentiate between sentiment-driven rallies and fundamentally sustained trends, as the former can fade quickly if underlying growth does not follow through.