Stocks That Were Unaffected by the 2008 Global Recession

2008 is a year primarily known for the global financial recession, a crisis that shook economies, including India. It is regarded as one of the worst economic events since the Great Depression of the 1920s. Lehman Brothers, a major investment bank, crashed, which escalated the situation, turning it into an international banking crisis.

In the sections below, we shall see how this 2008 global recession impacted India and which major Indian assets were least affected by this event.

Here is a timeline of the 2008 global recession:

• January 21, 2008
  Losing as much as 1408 points, the benchmark index experienced one of its sharpest declines ever. Often regarded as Black Monday, the day caused widespread panic among investors due to a high degree of market volatility. This extreme decline was also the reason for weak global cues amid growing fears of a recession in the US.
• January 22, 2008
  The next day was no better; the BSE Sensex was down 2,273 points, hitting 15,332. The recovery was decent over the day, but the initial hours witnessed a trading halt owing to the benchmark crossing the lower circuit limit of 10%.
• February 11, 2008
  Global concerns continued over the next month as well. The Sensex lost almost 5% by February 11, 2008.
• March 3, 2008
  Owing to a frantic selling by funds, the Sensex lost almost 900 points by early March. This sell-off was triggered due to budget-related matters and continued concern over the US recession.
• March 17, 2008
  The index closed at 14,809, correcting by 951 points owing to unabated selling and weakening overseas markets.
• October 24, 2008
  By October 24, the index closed at 8,701, plunging by 1,070 points. The crash was massively led by a sell-off in the mid-cap and small-cap counters. However, defensive stocks such as pharma and FMCG performed well despite the crisis adversely affecting the domestic markets. 

• The 2008 global recession shook economies and banking sectors worldwide.
• FMCG, healthcare, pharma, and other consumer staples sectors tend to perform well despite economic events like a recession.
• Three Indian companies that were least affected by the 2008 global recession include Hindustan Unilever Limited (HUL), GlaxoSmithKline Pharmaceuticals Ltd., and Hero MotoCorp Ltd.

Here are three major Indian companies that thrived despite the 2008 global recession:

Hindustan Unilever Limited

Hindustan Unilever Limited (HUL) is an Indian FMCG company headquartered in Mumbai, Maharashtra. It is a subsidiary of Unilever and has a diverse product portfolio, including foods, beverages, personal care products, and water purifiers. Originally established in 1933 as Lever Brothers, the company was renamed Hindustan Lever Limited in 1956 after a merger. In 2007, it adopted its current name.

HUL demonstrated a strong performance during the 2008 global recession. Gaining double-digit growth, HUL proved how successful FMCG companies can thrive despite adverse economic conditions in the country.

Hero Honda (currently Hero Motocorp Ltd.)

Hero Honda, now known as Hero MotoCorp Ltd., is an Indian scooter and motorcycle manufacturer. This Delhi-based company is one of the largest two-wheeler makers in the world.

The overall sector did not really perform well during the 2008 global recession. However, surprisingly, Hero Honda emerged with splendid numbers. Owing to their brand recall value and right rural targeting, they managed to climb almost 15% over the year. They utilised the purchasing power of rural India, which was not hurt as badly during the crisis.

GlaxoSmithKline Pharmaceuticals Ltd.

GlaxoSmithKline Pharmaceuticals Ltd. operates as a subsidiary of GlaxoSmithKline PLC and is a leading pharmaceutical company in India. The company specialises in the sale of prescription medicines and vaccines, and it achieved a growth rate of close to 11% during the 2008 global recession.

The strong performance of HUL and GSK in 2008 is not surprising, given the investment behaviour during times of crisis or high market volatility. Investors tend to shift towards defensive investments, and the FMCG and pharma indices are among the top performers in this category.

Several sectors and businesses actually flourish during negative economic events like a recession. Budget-conscious consumers panic-buy essentials while looking for discounted staples, and customers from rural areas who are largely unaffected by the recession continue their purchasing habits like usual. People avoid luxury buying and prefer to spend their money on businesses that cater to segments that matter to them the most during this period. Hence, economically resilient sectors like FMCG, pharma, and healthcare continue to thrive despite events like the 2008 global recession.