God Loves His Children Even as They Toddle, Falter, and Fall

We have all seen a toddler learn to walk. He takes a small step and totters. He falls. Do we scold such an attempt? Of course not…

Compared to the perfection of God, we mortals are scarcely more than awkward, faltering toddlers. But our loving Heavenly Father wants us to become more like Him… 

I do not believe in a God who would set up rules and commandments only to wait for us to fail so He could punish us. I believe in a Heavenly Father who is loving and caring and who rejoices in our every effort to stand tall and walk toward Him. Even when we stumble, He urges us not to be discouraged—never to give up or flee our allotted field of service - but to take courage, find our faith, and keep trying. 

Pres. Uchtdorf, "Four Titles", April 2013 General Conference

How Should We Respond When People Around Us Denigrate or Condemn Mormons?

I believe remaining silent in situations like this reinforces the negative at the expense of the positive - and that it does so in one way that gets overlooked by almost everyone:

With many people who are Christian, if they respect you but don't know your religious affiliation, they will assume (because they respect you) that you are "like them". At the very least, they will believe you aren't part of a "damnable cult" like Mormonism, as they see it. Your silence reinforces that stereotype and actually contributes to the solidification of their characterization - since they will look at you as an example of someone who knows better than to associate with people who are damned to Hell, like Mormons and Jehovah's Witnesses (and, in some cases and places, Catholics).

I believe there certainly are times when it's appropriate to remain silent in the presence of someone who is railing against the Church, but the effect described above is worth considering, in my opinion - no matter how you choose to act.