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Informist, Friday, Sept. 5, 2025

MUMBAI – Shares of fast-moving consumer goods companies are likely to move in a range next week as they had already risen in anticipation of lower goods and services tax rates and the likelihood of a further upside is less, analysts said. Investors have been booking profits since the government announced the GST rejig late Wednesday.

The stocks have been trading in a range for the last five months and this trend is expected to continue, said Vipin Kumar, assistant vice-president of equity research and senior derivatives analyst at Globe Capital Market. On Friday, the Nifty FMCG index closed 1.4% lower at 56292.10 points. Analysts see immediate support at 55480 points and resistance at 57500 points.

The fall in prices of tea, palm oil, and coffee, a good monsoon, favourable base for urban consumption, reduction in personal income tax announced in the Union Budget, and the upcoming 8th Pay Commission, augur well for FMCG consumption in the next 12-15 months, Kotak Institutional Equities said in a report. It expects most companies to pass on the benefit to consumers in the form of grammage additions in low-unit packs.

Larger packs will benefit from price cuts and promotions, Nuvama Institutional Equities said in a report. The brokerage expects slight margin expansion for most consumer staples companies ahead of the festival season, given higher operating leverage and no formal anti-profiteering clause so far.

The GST cuts were in line with the expectations of the market, while tax reductions on biscuits, bakery products, oral and hair care products were surprising, an FMCG analyst at a domestic brokerage said. Although these reforms are widely expected to boost consumption, the growth in volumes of companies is unlikely to be "supernormal", he said. The revival of demand in the FMCG sector will be moderate in Oct-Mar and there will only be a gradual recovery going ahead, he said. "You won't buy more biscuits and soaps simply because it's cheaper," the FMCG analyst said.

The sharp, broad-based reduction in GST rates of most food and key personal care categories could partially revive consumption, which has been affected in the past 2–3 years. The inflation in commodity prices had weakened demand and risen more than the income growth of households, Kotak Equities said in the report.

The brokerage expects the government to increase the National Calamity Contingent Duty or introduce a new tax, such as health cess, to keep aggregate taxation on cigarettes broadly unchanged. "Most FMCG stocks have run up in the past two weeks and were partly pricing in GST rate cuts," Kotak Equities said. The brokerage expects moderate upside from current levels.

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Following are the resistance and support levels for the stocks for next week as per calculations by Informist based on their prices on the National Stock Exchange:

End

Reported by Simran Rede

Edited by Nishant Maher

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