NIFTY FMCG index up 1%: Britannia, Emami surge 4% but Tata Consumer Products down over 2%; here is why

FMCG stocks: The top gainers on the FMCG index were Britannia Industries (up over 4%), followed by Emami Limited (up 4%), Colgate-Palmolive (India) (up 3.7%), and Nestle India (up 2.28%). FMCG stocks: Most stocks in the fast-moving consumer goods (FMCG) basket were trading with impressive gains on Thursday, September 4, after the big overhaul in the goods and services (GST) rate structure. In the morning trade, the NIFTY FMCG index was trading 1.04% higher, with nine constituents trading in the green and the other six in negative territory. The top gainers on the FMCG index were Britannia Industries (up over 4%), followed by Emami Limited (up 4%), Colgate-Palmolive (India) (up 3.7%), and Nestle India (up 2.28%). On the flip side, Tata Consumer Products (TCPL) was the biggest loser – down over 2% at ₹1,081.80. The other losers were Godrej Consumer Products, or GCPL (down 1.90%), and Radico Khaitan (down 0.64%). Varun Beverages and United Breweries were also trading in the red. Here is why certain FMCG stocks are surging and a few are in the red. Gainers FMCG stocks such as HUL, Dabur, Britannia, Colgate-Palmolive, and ITC rose in the trade as GST tax rates on common use items ranging from hair oil to corn flakes, TVs, and personal health and life insurance policies were slashed after the all-powerful GST Council on Wednesday approved a complete overhaul of the Goods and Services Tax regime. The GST Council approved an overhaul of rates by limiting slabs to 5% and 18%, effective from September 22, the first day of Navaratri. Almost all personal use items will see rate cuts as the government looks to boost domestic spending and cushion the economic blow of the US tariffs. The panel approved simplifying the goods and services tax (GST) from the current four slabs -- 5, 12, 18 and 28% -- to a two-rate structure -- 5 and 18%. A special 40% slab is also proposed for a select few items such as high-end cars, tobacco and cigarettes. While daily use food items will continue to attract a nil tax rate, common use food and beverages ranging from butter and ghee to dry nuts, condensed milk, sausages and meat, sugar boiled confectionery, jam and fruit jellies, tender coconut water, namkeen, drinking water packed in 20-litre bottles, fruit pulp or fruit juice, beverages containing milk, ice cream, pastry and biscuits, corn flakes and cereals, and sugar confectionery are likely to see a cut in the tax rate to 5% from the current 18%. All forms of chapati and paratha will be charged nil tax, down from the current rate of 5%. Consumer goods such as tooth powder, feeding bottles, tableware, kitchenware, umbrellas, utensils, bicycles, bamboo furniture and combs will see a rate cut from 12% to 5%. The rates on shampoo, talcum powder, toothpaste, toothbrushes, face powder, soap and hair oil have been cut down to 5% from 18%. Losers Varun Beverages: Shares of Varun Beverages Ltd. (VBL), a major Indian franchise bottler and one of the world's largest franchisees for PepsiCo, manufacturing and distributing a wide range of PepsiCo's products like Pepsi, Mountain Dew, 7UP, Tropicana, and Aquafina, were trading in the red. The stock was in the red as popular soft drinks, such as Coca-Cola and Pepsi, along with other non-alcoholic beverages, will become costlier, with the GST Council on Wednesday approving a hike in the tax rate on carbonated beverages to 40% from 28% at present. As part of the reforms of the Goods and Services Tax (GST), the council increased the rate on carbonated beverages of fruit drinks or carbonated beverages with fruit juice to 40% from 28%. Tata Consumer Products (TCPL): The fall in the share price could be attributed to the fact that the government has hiked the GST rate on caffeinated beverages to 40% from 28%. Other non-alcoholic beverages will also become costlier, as the GST rate on these items has been increased to 40% from 18%. Non-alcoholic beverages are drinks that do not contain any amount of alcohol. Some popular non-alcoholic beverages include soda, juice, tea, coffee, and energy drinks. The GST council has also raised the rate on all goods (including aerated waters) containing added sugar or other sweetening matter or flavouring to 40% from 28%. Tata Consumer Products has a decent tea and coffee portfolio. It includes prominent brands such as Tata Tea, Tetley, Eight O'Clock Coffee, and Tata Coffee. Radico Khaitan, United Breweries: These shares were lower, as alcohol remains outside GST’s ambit and continues to be taxed separately by states through excise duties.