GST: FMCG stocks rise on lower tax

FMCG stocks saw a positive movement on Friday as investors cheered the possibility of consumer goods becoming cheaper after the implementation of the GST. The BSE index for the FMCG sector gained 1.9% to close at 9,627 even as the benchmark indices closed flat on Thursday. On the other hand, all the other major sectoral indices closed in the red.

Among the FMCG companies, shares of Colgate-Palmolive India soared 3.6% — the best by any company that is a part of the FMCG index. Shares of ITC  and Emami closed 2.8% and 2.4% higher. This rally of ITC shares also helped the benchmarks recover from the selling in the broader markets. ITC has a weight of around 11.5% in the Sensex.

Market participants said GST will provide much-needed impetus for FMCG firms which are yet to recover from the impact of demonetisation. The BSE FMCG Index has gained little more than 20% in the current calendar.

However, shares of consumer durables witnessed a fall as the GST rate for the sector is higher than the current tax slab. The BSE Consumer Durables Index lost one per cent to close at 15,475.71. Similarly, the index for Consumer Discretionary Goods & Services also lost one per cent during the session. Shares of Crompton Greaves were down 3.8% while shares of Symphony and Whirlpool of India lost 1.8% and 1.4%, respectively.