Auto sector and the fast-moving consumer goods sector (FMCG) stocks rallied in early trade on Thursday, boosted by the various announcements of GST 2.0.
Finance Minister Nirmala Sitharaman made several announcements on Wednesday, in a cheer for the aam aadmi ahead of Navratri and Diwali.
The Nirmala Sitharaman-led GST Council overhauled the complicated indirect tax regime, announcing sharp reductions in rates on food and daily essential items as well as consumer durables like TVs and refrigerators.
The GST bonanza will leave more money in the hands of the middle class, which received a substantial tax relief earlier this year after annual income of up to Rs 12 lakh was made tax-free in the Union Budget.
“There was excitement from the time the announcement was made. We have seen rallies in FMCG, autos, consumer discretionary, we have seen rally in power, insurance, basically all the, you know, essential items that one needs,” said Gaurang Shah, Head Investment Strategist at Geojit Financial Services.
“And now that, you know, things are getting out in public domain, you might see a little bit of profit booking probably from a short to medium term point of view. So, if you are a trader, I think you should possibly, you know, there is a good old saying, in the market that buy on boomers and sell on you. So, possibly, might see a little bit of profit booking,” he added.
“But long term, I think this is going to play a huge role in terms of stabilising the economy. At the same time, giving a decent amount of push to the consumption. And of course, it remains to be seen what is the pass on factor from the sectors and the companies which are going to get benefited out of this GST cut,” said Shah.
“So, long term, still remain positive. But I think short to medium term, a lot is there with the price now. So, maybe, you know, one can possibly take a breather now, let clarity come and then possibly take a fresh call on the sectors that are going to get positively impacted by the GST cut,” he added.
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