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.
DMart jumped 8.7% and Zomato was up 6.7%. Maruti Suzuki, Tata Consumer, Bajaj Auto, Eicher Motors and ITC gained 3-5%.“We believe that consumer discretionary in particular will benefit from the aspirational needs of the salaried class, hence segments such as auto, retailing, travel and tourism, hospitality and real estate could be the beneficiaries,” said Ashish Gupta, chief investment officer at Axis Mutual Fund.Gupta said that a pick-up in demand should also be a catalyst for improved capital spending by the private sector.
Udasi said that among realty, automobiles and other discretionary spaces, premiumisation as a trend might continue with disposable incomes going up, as aspirations of the middle class, even from tier-3 & 4 towns are growing.
Nifty’s Consumer Durables and Realty indices were top gainers in 2024, up over 34% each. The Nifty Auto index had advanced 22% whereas the FMCG index had ended flat last year.
To be sure, some experts believe the tax cuts may not boost consumption.
“We don’t see any material change for the consumer sector after the budget, as the numbers reported in the third quarter were still lower than expected,” said Sahil Kapoor, head-products and market strategist, DSP Mutual Fund. “The entire ₹1 lakh crore might not go toward consumption, and we may see a benefit of about 25-30% of this amount, which is probably less than 0.5% of the GDP in its impact.”
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