FMCG Stocks Outlook for the week – 22 – 26.05.2017

FMCG Stocks Outlook for the week – 22 – 26.05.2017

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FMCG Stocks Outlook for the week – 22 – 26.05.2017 )

Stocks of most fast moving consumer goods companies are likely to fall in the coming week as investors may book profit since shares of most companies remain overbought. FMCG companies could also remain under pressure due to new indirect tax regime as these entities are unlikely to hike prices of their products in the near future in order to maintain current sales volumes. Under the anti-profiteering clause in the Goods and Services Tax, companies have to pass on tax benefit to consumers. This could drive customers to branded products from unbranded ones, spurring the growth in volume for FMCG companies. The GST Council has decided to exempt cereals and milk--currently in 0-5% tax slab--from any GST. The council has kept the tax slab for sugar, tea, edible oil and coffee constant at 5%. Hair oil, soap and toothpaste will be taxed at 18%, down from the current 22-26%. Most other products such as aerated water, chocolates, chewing gum and malted food drinks will be taxed at 28%, higher than the current rate of effective taxation. Emami Ltd, which mostly sells personal care products, could gain in the near term due to product launches and the company's higher spends on advertising and promotion

Source : Cogencis Information Services Ltd.