The Sensex and Nifty are down more than 20% from their peak, which means we’re officially in a bear market. It’s that time when investors typically grab their tin hats, crawl under the desk and wait for the carnage to stop. Some others go looking for safe havens – stocks that are expected to weather the storm.

So which have been the most resilient stocks in the Indian markets in the past month? Among the large stocks, Asian Paints Ltd, Nestle India Ltd and Hindustan Unilever Ltd are the only stocks within the Nifty to have fallen by less than 10% from their respective 52-week highs.

This is interesting because these are also among the most expensive stocks in the market. While the Nifty trades at about 15 times one-year forward earnings estimates, consumer stocks trade at about 43 times forward earnings. This excludes ITC Ltd, which trades at a far lower multiple than other consumer stocks.

“When there are serious concerns about earnings elsewhere, investors are essentially saying we’ll take stocks with a healthy earnings and cash flow track record, regardless of valuations," says an analyst at a domestic institutional brokerage, requesting anonymity.

Of course, consumer stocks are also expected to gain from the sharp drop in crude prices, since crude and its derivatives form a large part of raw material and packaging costs. In the case of Asian Paints, analysts at Kotak Institutional Equities estimate a 150-200 basis points expansion in operating profit margin, translating into 6-8% increase in earnings per share (EPS), on account of the drop in crude prices. Some of the benefits are estimated to be passed on to customers, which may well drive sales. In the case of Hindustan Unilever, they estimate margin expansion of about 100-120 basis points, translating into a 5% increase in EPS. “We expect FMCG companies to largely retain benefits from the crude price fall," they said in a note to clients.

To be sure, investors need to bear in mind that overall consumption demand remains poor, and the central bank’s consumer confidence survey suggests things are progressively getting worse. The spread of the coronavirus may not hit supply for these companies badly, like with some other industries, but their impact on demand cannot be ruled out.

But as the rich valuations of some of these stocks show, they are immune to such concerns. Also note that not all consumer stocks are viewed the same by investors. Companies such as Hindustan Unilever and Nestle have managed to improve margins, thanks to their ability to thwart competition. The bet appears to be that market share gains and margin improvement will continue.

Some other consumer stocks such as Marico Ltd, which are struggling for growth, have done relatively far worse. Within the Nifty, the other set of stocks that have been fairly resilient are pharma stocks such as Dr Reddy’s Laboratories Ltd and Cipla Ltd, which have fallen about 10% in the past month.

But these stocks have given investors poor returns in recent years.

What makes consumer stocks stand out is that they rose sharply in the past three years, and have continued to retain most of those gains.