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What is the story about?
The new GST reforms take effect from Monday, September 22, putting the spotlight on various sectors, from Automobiles, to consumer durables to dairy, and even FMCG names, on hopes of a potential surge in consumption.
The day is also important as the goods will now be available at cheaper rates on the first day of the festival of Navratri. Here's a list of sectors and stocks you need to watch out for:
Small cars now attract a flat 18% GST, down from the earlier 28% plus compensation cess, while mid-sized cars and SUVs will be at a flat 40% rate, compared to a 28% rate earlier and a variable cess that went up to as high as 22%.
Companies from Maruti Suzuki to Mahindra and Mahindra , Tata Motors, Hyundai Motor India, and Eicher Motors, have all announced price cuts ranging from ₹50,000 to as high as ₹5 lakh, depending on the models, to pass on the benefits of the GST cut to consumers.
Any potential sales taking place in the next eight days, would reflect in their September sales figures, which will be reported on October 1.
Since Prime Minister Narendra Modi's Independence Day address, where he first promised the landmark reforms, the Nifty Auto index has rallied 13%.
Stocks like Maruti Suzuki, M&M, Hyundai Motor India, Eicher Motors have rallied between 15% to 20% since then, and most of them, including TVS Motor and Ashok Leyland, are trading at record or 52-week high levels.
The GST on Consumer Durables such as Air Conditioners (ACs), large-screen TVs, dishwashers, refrigerators, and various small kitchen appliances was cut down to 18% from the earlier rate of 28%.
AC manufacturers have had a tough first half of the year as the early onset of monsoon and then the current prolonging of the season has hit demand, which reflected in their guidance and quarterly numbers for the April-June period.
However, companies are now hopeful that lower rates will result in a revival of demand in the second half of the financial year.
B Thiagarajan of Blue Star, interacting with CNBC-TV18 on September 4, said that the festive season is generally good when the summer turns out to be bad. He added that while the company anticipated a 15% to 20% growth during the festive season, but due to the GST reform, he now expects 30% growth.
The month of September so far has seen stocks like Blue Star, Havells, Voltas gain up to 4% each, while those of PG Electroplast (8%), Dixon Tech (9%), and Amber Enterprises (14%) have seen better returns.
GST rates on various dairy and dairy products were either brought down to 5% from the earlier 12% slab or higher, or was completely brought down to nil for segments like Ultra-High Temperature Milk, paneer, ad Pizza Bread. Butter, ghee etc. saw GST being brought down to 5% from the earlier 12% rate.
In response to this, dairy major Amul, though unlisted, has already slashed the prices of over 700 items that it offers.
"The reduction in GST rates on UHT Milk and Paneer to NIL and dairy products like ghee, butter, cheese from 12% to 5% marks a significant development for the food and FMCG sectors," Devendra Shah, Chairman of Parag Milk Foods had said when the reforms were announced. "The lower tax burden could help increase consumption of branded and quality-assured dairy products, potentially encouraging a shift away from unregulated or adulterated alternatives," he added.
Over the last one month, shares of Parag Milk Foods have surged 25%, while those of Dodla Dairy, Heritage Foods, have gained between 6% to 12%.
The day is also important as the goods will now be available at cheaper rates on the first day of the festival of Navratri. Here's a list of sectors and stocks you need to watch out for:
Automobiles
Small cars now attract a flat 18% GST, down from the earlier 28% plus compensation cess, while mid-sized cars and SUVs will be at a flat 40% rate, compared to a 28% rate earlier and a variable cess that went up to as high as 22%.
Companies from Maruti Suzuki to Mahindra and Mahindra , Tata Motors, Hyundai Motor India, and Eicher Motors, have all announced price cuts ranging from ₹50,000 to as high as ₹5 lakh, depending on the models, to pass on the benefits of the GST cut to consumers.
Any potential sales taking place in the next eight days, would reflect in their September sales figures, which will be reported on October 1.
Since Prime Minister Narendra Modi's Independence Day address, where he first promised the landmark reforms, the Nifty Auto index has rallied 13%.
Stocks like Maruti Suzuki, M&M, Hyundai Motor India, Eicher Motors have rallied between 15% to 20% since then, and most of them, including TVS Motor and Ashok Leyland, are trading at record or 52-week high levels.
Consumer Durables
The GST on Consumer Durables such as Air Conditioners (ACs), large-screen TVs, dishwashers, refrigerators, and various small kitchen appliances was cut down to 18% from the earlier rate of 28%.
AC manufacturers have had a tough first half of the year as the early onset of monsoon and then the current prolonging of the season has hit demand, which reflected in their guidance and quarterly numbers for the April-June period.
However, companies are now hopeful that lower rates will result in a revival of demand in the second half of the financial year.
B Thiagarajan of Blue Star, interacting with CNBC-TV18 on September 4, said that the festive season is generally good when the summer turns out to be bad. He added that while the company anticipated a 15% to 20% growth during the festive season, but due to the GST reform, he now expects 30% growth.
The month of September so far has seen stocks like Blue Star, Havells, Voltas gain up to 4% each, while those of PG Electroplast (8%), Dixon Tech (9%), and Amber Enterprises (14%) have seen better returns.
Dairy Products
GST rates on various dairy and dairy products were either brought down to 5% from the earlier 12% slab or higher, or was completely brought down to nil for segments like Ultra-High Temperature Milk, paneer, ad Pizza Bread. Butter, ghee etc. saw GST being brought down to 5% from the earlier 12% rate.
In response to this, dairy major Amul, though unlisted, has already slashed the prices of over 700 items that it offers.
"The reduction in GST rates on UHT Milk and Paneer to NIL and dairy products like ghee, butter, cheese from 12% to 5% marks a significant development for the food and FMCG sectors," Devendra Shah, Chairman of Parag Milk Foods had said when the reforms were announced. "The lower tax burden could help increase consumption of branded and quality-assured dairy products, potentially encouraging a shift away from unregulated or adulterated alternatives," he added.
Over the last one month, shares of Parag Milk Foods have surged 25%, while those of Dodla Dairy, Heritage Foods, have gained between 6% to 12%.
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