1. FMCG stocks get a GST leg-up, jump up to 4%

FMCG stocks get a GST leg-up, jump up to 4%

The Nifty FMCG index closed the session 2.05% higher at 24,352.90 points. The S&P BSE FMCG index closed 1.86% higher at 9,627.43 points.

By: | Mumbai | Updated: May 20, 2017 4:49 AM
These products will see tax rate of 18% under GST compared with the current tax rate of 22 to 26%.

FMCG stocks on Friday rallied after it became clear most goods would attract a lower goods and services tax (GST) — toothpaste, hair oil and soaps for instance. These products will see tax rate of 18% under GST compared with the current tax rate of 22 to 26%. The Nifty FMCG Index jumped as much as 4.2% to a record high since January 1996 and closed the session 2.05 % higher at 24,352.90 on Friday. The S&P BSE Fast moving consumer goods index closed the session 1.86 % higher at 9,627.43 points.

FMCG stocks rallied sharply led by the Colgate-Palmolive which ended 3.59% higher at Rs 1014.55 a share on the Bombay Stock Exchange (BSE). Apart from Colgate- Palmolive, Tata Coffee, ITC, Jay Shree Tea and Industries, Emami, Heritage Foods, Hindustan Unilever, Waterbase, Marico, Eveready Industries and Godrej Consumer Products were among the gainers. The price of these stocks surged between 1.30 to 4 %.

Pinakiranjan Mishra, partner and national leader for Retail and Consumer Products, EY India, said, “The GST rate structure – mostly between the 5-18% range – for consumer goods is a welcome move and is expected to decrease costs for the consumer and drive consumption in the country. Mass consumption goods, like hair oil, soaps and toothpaste, are pegged at 18%, and will see a drop in price. While white goods are expected to see a slight increase in the overall tax rate, the impact should be marginal. Overall, this is a commendable move for the consumer products sector, and will augur well for the industry.” Hindustan Unilever’s management, in its post-results conference call, also said that in the near-term, consumer sentiment will improve and input costs are stable and that GST is a welcome reform.

While white goods are expected to see a slight increase in the overall tax rate, the impact should be marginal. Overall, this is a commendable move for the consumer products sector, and will augur well for the industry.” Hindustan Unilever’s management, in its post-results conference call, also said that in the near-term, consumer sentiment will improve and input costs are stable and that GST is a welcome reform.

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