Shares of fertiliser companies rallied on Monday after the GST Council lowered the tax rate on fertilisers from 12% to 5% in order to reduce the burden on farmers. While shares of Shiva Global Agro Industries rallied as much as 18%, National Fertilizers, Gujarat State Fertilizers & Chemicals and Chambal Fertilisers surged up to 7.8% in early trade on BSE. Other stocks such as Coromandel International, Mangalore Chemicals & Fertilizers, Nagarjuna Fertilizers & Chemicals and Zuari Agro Chemicals gained in the range of 3% to 5.5% during the day trade.
Reacting to the development, the trading volumes of most fertiliser stocks surged with Shiva Global Agro Industries witnessing a combined traded volume on BSE and NSE at 4.7 times against its 30-day average. Gujarat State Fertilizers & Chemicals and Rashtriya Chemicals & Fertilisers saw their traded volume increase by 1.5 to two times of their 30-day averages.
“Some felt the earlier rate of 12% may be a burden on consumer. There was a consensus (in the GST Council) to bring rate to 5%,” finance minister Arun Jaitley told reporters after the 18th meeting of the Council. He further added the decision to reduce the tax rate on fertilisers was taken because of apprehensions that price of the crop nutrient may go up. With Monday’s gain, National Fertilizers and Shiva Global Agro Industries have more than doubled between January to July 03, 2017. Compared to this the benchmark Sensex clocked 17.3% gain.