Tax gains likely to boost consumption; Realty, FMCG and Consumer Durables indices surge
income tax cuts in the budget spurred a rally in shares of consumption companies Saturday as investors bet that individuals with money at their disposal would be encouraged to spend more on personal mobility choices and other consumer discretionary products.
Nifty’s Realty index jumped 3.4%, while Fast Moving Consumer Goods (FMCG) and Consumer Durables indices were up about 3% each. The Nifty Auto index gained 1.9%. Benchmark Nifty ended 0.1% lower.
“India’s taxpayers will now have about ₹80,000-1.2 lakh more in hand, annually, after the latest tax cuts and this would be significant for those earning up to ₹25 lakh,” said Sonam Udasi, senior fund manager, Tata Asset Management Company.
“We see this boosting consumption, and in our view, consumer discretionary stocks, consumer staples along with aspirational consumption will get support from this move.”
The tax cuts could also boost savings that would be channelled into the capital markets, he said.
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