Voltas, Blue Star: Here's why consumer durables stocks are in demand today

Consumer Durable stocks:  Shares of consumer durable stocks were higher in trade on Monday, soaring by up to 10 per cent during intra-day trading on the NSE. The Nifty Consumer Durable Index, which tracks the performance of 15 stocks in the consumer durables sector, jumped by 3.14 per cent, reaching an intra-day high of 38,503. Notably, all the constituents of the index posted gains during intra-day trading.

 

Among individual stocks, Voltas shares logged an intra-day high of 10 per cent, PG Electroplast rose by 9.60 per cent, Blue Star stock gained 8.64 per cent, Amber Enterprises India climbed 7.90 per cent, Whirlpool of India increased by 7.30 per cent, and Havells India added 6.94 per cent.  CATCH STOCK MARKET UPDATES TODAY LIVE

Why are consumer durables stocks buzzing in trade today?

The upward movement in consumer durables stocks is being fueled by the announcement of changes in the Goods and Services Tax (GST) regime by Prime Minister Narendra Modi. During his 79th Independence Day address, Modi announced that the GST regime will undergo a complete "overhaul" to make "everyday items cheaper" before Diwali 2025.

 

Notably, the Centre has proposed a two-tier GST system with 5 per cent and 18 per cent slabs, along with a 40 per cent slab for a few items in the "sin goods" category. The removal of the compensation cess, according to a Business Standard report, will coincide with the rationalised and reduced rates. Furthermore, the simplification of the input tax credit system will be undertaken as part of this round of GST reforms. Capacity building, by strengthening GST tribunals, is also in the works.

 

Sentiment further improved with a report from Motilal Oswal Financial Services (MOFSL), which suggested that the consumer durables sector is likely to benefit from the GST rationalisation.  ALSO READ | M&M, Eicher, Maruti Suzuki hit record highs: Auto stocks rally decoded 

"Key segments and sectors that will benefit from the GST rationalisation include Consumer Staples (through better demand, lower raw material costs), Automobiles (4-wheelers), Cement, Hotels (sub-₹7,500 room rate inventory), Retail (footwear), Consumer Durables (mainly RACs), Logistics, Quick Commerce, and EMS (likely better demand for ACs)," analysts at MOFSL wrote in their report.

 

Among the consumer durables sector, analysts at MOFSL have picked Voltas, and Havells India as top beneficiaries from the GST changes. Among the sector beneficiaries, analysts at MOFSL have identified Voltas and Havells India as the top beneficiaries of the GST changes. The former is expected to benefit from the reduced GST on air conditioners, which will now be taxed at 18 per cent instead of the previous 28 per cent, while the latter will benefit as 24 per cent of its topline comes from Lloyd's.