FMCG stocks surge on GST rate announcements; Edelweiss terms it in line with estimates
Niche indices such as BSE FMCG and Nifty FMCG gained over 2 percent. Major stock such as ITC and Hindustan Unilever too gained
FMCG stocks were one of the big gainers of the day as the Street cheered positive cues from the GST Council’s meet that are set to benefit these firms.
The new tax regime will see a roll out from July 1 and the rates for 98 categories of goods was decided by the council on Thursday.
Edelweiss Financial Services pointed out that the GST Council approved 7 set of GST rules, while the remaining 2 set of rules relating to transition and returns are being vetted by a legal committee. The GST rates for select products have been disclosed wherein lower tax rates on FMCG products was on expected lines, but lower tax rates on coal and capital goods was a big surprise
Niche indices such as BSE FMCG and Nifty FMCG gained over 2 percent. Major stock such as ITC and Hindustan Unilever too gained, which drove the indices during the morning session. Other stocks such as Colgate Palmolive, Tata Coffee, Britannia, and Emami, among others, gained during the day’s trade.
“We believe that GST is a structural reform and expected to accelerate the pace of GDP growth in India, despite implementation challenges in near term. The regime will usher in lower taxes, seamless input tax credit, logistics savings and market share swings from unorganised to organised players,” it said in its report.