FMCG stocks ITC, HUL rally up to 5% on income tax relief

Despite volatility in the broader market, FMCG, consumer durables, auto and realty stocks witnessed strong buying on Budget day after Finance Minister Nirmala Sitharaman announced much needed personal income tax reliefs for the middle class in the Union Budget 2025. Investors sentiment were lifted after the FM Sitharaman, while presenting her eighth consecutive Union Budget, said that there would be no income tax payable up to an income of ₹12 lakh, which is set to boost consumption.

Reacted to the Budget announcements, shares of FMCG heavyweights ITC and HUL gained up to 5%, while Nestle India, Bajaj Consumer Care, Dabur, Britannia, Colgate, and Emami shares rose in the range of 1-4%.

Consumption stocks such as Zomato and Swiggy also jumped up to 5%, while auto heavyweight Maruti Suzuki India and M&M rose up to 4%.

Meanwhile, the BSE Sensex was trading 267 points lower at 77,233, and the NSE Nifty dropped 107 points to 23,401 level. The 30-shares Sensex dropped as much as 494 points, or 0.6%, to 77,006 post Budget announcements, while the Nifty50 slipped 154 points, or 0.65%, to 23,346 mark.

The consumption slowdown has been one of the major concerns for the economy in the recent past. The rise in personal income tax level will significantly add money into people’s pockets, and is expected to influence consumer behavior, making spending more attractive compared to saving. The anticipated increase in disposable income is poised to drive higher consumption in the FMCG sector, as consumers are likely to allocate a portion of their increased earnings towards everyday goods and services.

“The significant reform in personal taxation is set to boost consumption, providing a major advantage for D2C brands, quick commerce, and FMCG sectors,” says Nishith Maheshwari Head - Digital Business Loans, InCred Finance.

Vikram Kasat, Head - Advisory, PL Capital, says Budget 2025 seems to have addressed the issue of consumption slowdown by providing boost to middle class in the form of lower tax. However, capex may not be as budgeted and could be worry for growth. Further, New tax code needs to be seen for any changes in capital gain tax.

Manish Jain, Chief Strategy Officer, Institution Business, Mirae Asset Capital Markets, says the budget is positive for FMCG, consumption, retail, realty, auto and new age companies. “Move in personal taxes and reduction in BCD in consumer electronics (like flat panels) to boost consumer electronics.”

“The tax relief by significantly raising the taxable limit and rejigging the tax slabs would give a major boost to consumer sentiment and consumption in the economy,” says Vishal Kampani, Vice Chairman and Managing Director, JM Financial Ltd.

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