GCPL, HUL, other key FMCG shares rise up to 3% on cut in crude edible oil import duty

Godrej Consumer, HUL, other select FMCG stocks gain up to 3% after govt cuts import duty on crude edible oil by 10%

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Shares of select FMCG companies have posted strong gains on June 2 after the Centre lowered basic import tax on crude edible oils, pushing the the Nifty FMCG index in the green on a subdued trading session.

The government reduced basic customs duty on crude palm oil, crude soy oil and crude sunflower oil from 20 percent to 10 percent, according to a notification reviewed by Reuters. The decision, effective May 30, is expected to stimulate domestic demand, leading to increased import of palm oil, soy oil and sunflower oil, as well as lower edible oil prices.

FMCG companies that are users of these oils are set to benefit from the decision.

Shares of Godrej Consumer Products were the top gainer on the index, rising nearly 3 percent. The company uses palm oil in its soaps, detergents and other items. Earlier in May, GCPL's management had said that its quarterly margins were dented by soaring palm oil prices.

Patanjali Foods followed, rising over 2 percent, while Britannia Industries and Varun Beverages shares gained over a percent, while Tata Consumer Products shares were up over one percent. Hindustan Unilever (HUL) and Colgate Palmolive shares were nearly one percent higher.

Notably, FMCG stocks have witnessed a significant decline recently. "In the past week, the benchmark indices displayed lackluster activity. The Nifty closed down 0.41 percent, while the Sensex fell by 270 points. Among various sectors, the PSU Bank index performed the best, gaining over 4 percent, while the FMCG index suffered the largest loss, dropping 2.29 percent," said Shrikant Chouhan, Head Equity Research, Kotak Securities.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.