PM Modi and stock market
Prime Minister Narendra Modi announced to reform to GST from the ramparts of the Red Fort to Diwali, which is seen on the Indian stock market. The market’s major index Sensex ran over 11,00 points on Monday. Meanwhile, a rally is also being seen in the shares of FMCG, AC companies. Stocks of these companies have fled up to 9 percent.
According to reports, GST can be divided into two major slabs, five percent and 18 percent and in addition the rate of synt tax will be 40 percent. After this news, today the stock of FMCG sector has seen a lot of jump.
At 10.35 am, the Nifty FMCG index was trading with a gain of 1.6 percent, with the index components Nestle India, Dabur India and HUL were at the forefront of up to six percent. At the same time, consumer durables also rose rapidly, the Nifty Consumer Durables Index jumped about 4 percent. At the top of the index, EMS and room air conditioner companies were at the forefront. The shares of PG Electroplast, Amber Enterprises, Blue Star and Voltas saw the highest growth of up to 9 percent.
Why FMCG stocks are gaining momentum
Shares of FMCG companies are increasing these days as they can get the benefit of GST rate cut. Currently, food and beverages products fall into 5%, 12% and 18% GST slabs. But many items with 12% such as ghee, butter, cheese, bottled water, juice, instant noodles, pasta, wafers and Chyawanprash can be shifted to 5% slab.
If this happens, Bikaji and Gopal Snacks will benefit the most. Nestle India can also get relief on about 30% of its product portfolio. Similarly, Dabur India can benefit from Beverages and Chyawanprash ITC from the rest of the FMCG segment and Britannia from dairy and wafers.