On Monday, stocks related to consumer goods will be in the spotlight after Finance Minister Nirmala Sitharaman announced some important tax changes in the Union Budget for 2025. She stated that individuals who earn up to Rs 12 lakh a year will not have to pay income tax. This could lead to more people spending money, especially since there are signs that urban shopping is slowing down.
Additionally, salaried workers will now receive a standard deduction of Rs 75,000, raising their tax-free income to Rs 12.75 lakh. These new tax slabs are expected to leave people with more money to spend, helping to boost overall consumption. Companies that sell everyday products are likely to gain the most since consumers may opt to spend their savings on essential items. Other areas, such as fast-food restaurants, innerwear, and alcohol, are also expected to see increased demand. Interestingly, cigarette companies will not face higher tax rates, which is a relief for them.
Expert Opinions on the Budget
Investec, a financial advisory firm, believes that these budget changes will help urban consumers while still supporting rural areas indirectly. They recommend buying shares from companies like GCPL, Marico, and ITC, despite ITC having limited urban exposure. Furthermore, Nestlé and Britannia are predicted to do well since they benefit from urban demand.
In terms of more luxurious items, Investec favors stocks like Radico Khaitan, United Spirits, and United Breweries. They also expect people to spend more on brands like Nykaa, Titan, and Sapphire Foods. Consumer goods focusing on urban buyers might perform better than those aimed at rural customers in the coming months.
CLSA’s Analysis
CLSA, another research firm, notes that these tax cuts could save people around Rs 1.1 lakh yearly, giving them more reasons to spend. They also mention that the government expects to receive a large dividend from the Reserve Bank of India. Although there are hints of increased spending in the fourth quarter, there are concerns about public sector shares facing pressure due to large stock sales.
CLSA warns that if infrastructure spending slows, it could negatively impact related stocks. They suggest being cautious about investing in public sector companies while staying positive about staple goods.
(Disclaimer: The views and opinions in this article belong to the experts and do not reflect the views of Thellv.news)
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