Consumer Stocks Rally On GST Cut Hopes, Sin Goods Shares Slide

Shares of companies in consumer-oriented sectors like automobile, fast-moving consumer goods (FMCG), consumer durables, insurance, hotels, cements, retail and textile rallied on August 18, 2025, amid optimism that the proposed GST reforms could lower tax rates and boost demand. Meanwhile, shares of sin goods such as liquor, cigarette and gaming shares fell during the day.

The gains came after Prime Minister Narendra Modi, in his Independence Day address on August 15, announced that the government would roll out “next-generation” GST reforms by Diwali to reduce the tax burden on households. “It will be a Diwali gift for you,” he said from the ramparts of Red Fort.

Shortly after PM Modi’s announcement, the Ministry of Finance said in a statement that it has submitted its proposal on GST rate rationalisation and reforms to the Group of Ministers (GoM) formed by the GST Council. The statement added, “Key areas identified for next-generation reforms include the rationalisation of tax rates to benefit all sections of society, especially the common man, women, students, middle class, and farmers.”

Auto Stocks Drive Gains

Leading the rally was automobile shares, as the Nifty Auto index, which represents the performance of the automobile segment of the financial market, jumped as much as 4.75 per cent in early trade. Among the index’s 15 constituents, the Hinduja Group commercial vehicle manufacturer Ashok Leyland’s shares led the gains, climbing as much as 8.72 per cent to Rs 132.60 per share on the NSE, its all-time high. Following it, the market leader in passenger vehicle Maruti Suzuki India rose as much as 8.15 per cent to Rs 13,990 per share on the NSE, its all-time high.

Shares of two-wheeler manufacturers like TVS Motor Company, Hero MotoCorp, Bajaj Auto also rallied up to 7.80 per cent, 8.72 per cent, and 5.06 per cent, respectively.

Other auto stocks such as Mahindra & Mahindra (M&M), MRF, Eicher Motors, Tata Motors, Bharat Forge, and Bosch too traded higher between 2 per cent and 4 per cent.

FMCG, Consumer Durables See Heavy Buying

The Nifty FMCG index, which tracks the poerformance of stocks companies dealing in non-durable, mass consumption products tat are available off the shelf, rose as much as 2 per cent. From the 15 constituents of the index, Nestle India rallied up to 7.25 per cent to Rs 1,168.40 apiece. Dabur, Britannia, Hindustan Unilever, Colgate Palmolive, and Godrej Consumer Products surged between 3 per cent and 5 per cent. Other FMCG stocks such as Emami and Tata Consumer Products also rallied in the range 2-3 per cent.

In the consumer durables sector, air conditioner and component manufacturers such as Blue Star, Amber Enterprises, Voltas advanced up to 8.64 per cent, 8.70 per cent, and 10 per cent, respectively. Accordingly, the Nifty Consumer Durables index, rose up to 3.57 per cent during the session. From the index, PG Electroplast rallied up to 13.7 per cent, Bata India rose up to 7.94 per cent, and Havells climbed up to 6.95 per cent.

Other consumer durable stocks Whirlpool of India, Century Plyboards, Dixon Technologies, and V Guard Industries also rallied between 3 per cent and 5 per cent.

Insurance, Hotels, Retail, Textile, Cement Stocks Rise Too

Insurance stocks such as Niva Bupa, SBI Life Insurance, HDFC Life Insurance, ICICI Prudential Life Insurance, and Star Health also rose up to 10 per cent. Hotel stocks such as Indian Hotels Company, Lemon Tree Hotels, ITC Hotels, Chalet Hotels, Oriental Hotels, among others rose up to 6.71 per cent.

Retail segment stocks such as Avenue Supermarts, Trent, Vishal Mega Mart, Metro Brands, Aditya Vision, Davin Sons Retail, and Aditya Consumer Marketing also rallied up to 20 per cent.

Textile sector stocks like Vardhman Textiles, Page Industries, KPR Mill, Bombay Dyeing, Welspun Living, Kitex Garments too gained during the session. From the cements sector, UltraTech Cement, Ambuja Cement, ACC, Shree Cement, JK Cement, JSW Cement, and Burnpur Cement rose up to 10 per cent.

Sin Goods Under Pressure

Shares of cigarette manufacturers like Godfrey Phillips, ITC, VST Industries, Golden Tobacco fell as much as 6 per cent. Alcohol stocks like Som Distilleries, United Breweries, Piccadily Agro Industries, Associated Alcohols and united Spirits also declined during the day.

Gaming sectors stocks like Nazara Technologies and Delta Corporation fell up to 2 per cent.

Two Slab Rates Under New GST Regime

GST rates are decided by the GST Council, which includes representatives from the Centre, states and Union Territories. At present, the system currently has four main slabs – 5 per cent, 12 per cent, 18 per cent and 28 per cent, which apply to most goods and services.

Under the new regime, the government is planning to simplify this structure by bringing it down to two slabs of 5 per cent and 18 per cent. A new, higher 40 per cent slab is also being considered for luxury and sin goods like liquor, tobacco and gaming.