Budget 2024: FMCG stocks surge up to 6% on govt’s plans to support rural economy; Nifty FMCG touches fresh high

FMCG stocks rise as budget emphasises boosting rural consumption. Nifty FMCG index hits all-time high. Govt allocates funds for rural development, introduces crop varieties, and cooperative sector policy.

A Ksheerasagar
Published23 Jul 2024, 05:00 PM IST
Budget 2024: FMCG stocks surge up to 6% on govt's plans to support rural economy; Nifty FMCG touches fresh high
Budget 2024: FMCG stocks surge up to 6% on govt’s plans to support rural economy; Nifty FMCG touches fresh high(Pixabay)

FMCG stocks have surged in today's trade as investors responded positively to the government's strong emphasis in Budget 2024 on boosting rural consumption. The budget outlined several initiatives aimed at boosting rural consumption, expected to support a recovery in FMCG sector volumes.

Despite front line indices ending today's session on a flat note, the Nifty FMCG index hit a fresh all-time high of 62,755 points, gaining nearly 3%. Among individual stocks, ITC surged 5.6%, Tata Consumer Products, Godrej Consumer Products, Marico, United Spirits, Procter & Gamble Hygiene & Healthcare, and HUL ended with gains between 1% and 4.3%.

Also Read | Budget 2024: ITC surges over 5% on no tax announcement for tobacco

Finance Minister Nirmala Sitharaman announced an allocation of 2.66 lakh crore for rural development, including infrastructure improvements. Sitharaman also revealed that 109 new high-yield and climate-resilient crop varieties will be introduced, and a national cooperation policy will be developed to advance the cooperative sector.

"Our government will bring out a national cooperation policy for systematic, orderly, and all-round development of the cooperative sector. Fast-tracking growth of the rural economy and the generation of employment opportunities on a large scale will be the policy goal," said Nirmala Sitharaman.

Also Read | Budget 2024: Hero, Eicher, TVS, Bajaj rise up to 3% on expected rural push

The budget also includes 1.52 lakh crore for agriculture and allied sectors, and Phase 4 of the Pradhan Mantri Gram Sadak Yojana (PMGSY) will be launched to ensure all-weather connectivity for 25,000 rural habitations.

On the other hand, the government's emphasis on rural development is set to positively impact the 2-wheeler market, which is crucial for domestic manufacturers such as Bajaj Auto, TVS Motor, and Hero MotoCorp. Since taking office for a third term, the BJP-led NDA government has introduced several initiatives to enhance rural consumption.

These include increasing the Minimum Support Price (MSP), providing a 2,000 instalment for farmers and offering financial aid for the construction of 30 million new houses in both rural and urban areas.

Also Read | Centre to digitise land records and maps to promote credit flow to farmers

Commenting on the budget, Vikas Khemani, founder of Carnelian Asset Management & Advisors, said, "The overall budget appears balanced, with the new coalition government clearly focusing on agriculture, manufacturing, employment generation, youth skilling, MSME support, and urban infrastructure development. This budget sets priorities for a "Viksit Bharat." Initiatives like the credit guarantee scheme for MSMEs and Mudra Loans are positive steps for MSME growth."

"In terms of tax reforms, the increase in LTCG by 2.5% and STCG by 5% could have been avoided, but it is not expected to significantly impact market sentiment. The budget maintains a good fiscal deficit and yet focuses on channeling resources to the desired sections. We remain confident in investing in India and believe in the vision of Viksit Bharat 2047. Many sectors like manufacturing, agriculture, infrastructure, and consumption will benefit from this budget," Vikas Khemani added. 

Also Read | Budget 2024 in charts: Did government really deliver for rural, farm sectors?

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.

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First Published:23 Jul 2024, 05:00 PM IST
Business NewsMarketsStock MarketsBudget 2024: FMCG stocks surge up to 6% on govt’s plans to support rural economy; Nifty FMCG touches fresh high

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