The proposed reforms in goods and services tax (GST) announced by the government last week, coupled with the Eighth Pay Commission dole-out, is likely to push consumption-driven stocks — such as air conditioners (ACs), select automobiles, fast-moving consumer goods (FMCG), retail, and counters of quick-service restaurants (QSRs) — into higher orbit over the next few months, believe analysts.
Photograph: Mansi Thapliyal/Reuters
Against this backdrop, they suggest investors stay with the “consumption” theme rather than “capex-driven” plays over the next few months.
On the bourses, the consumption-driven theme has played out well so far in 2025-26 (FY26), with the Nifty India Consumption rising nearly 11 per cent, compared to around 5 per cent upswing in the Nifty50.
Here are leading brokerages’ investment strategies.
Bernstein Equity
Markets will cheer this fiscal push, although a part of this flow will emerge from truncated capex.
However, a recovery demand in the economy to eventually push private spending is the argument in the medium term.
As for Nifty, we continue to expect a high single-digit return for the rest of the year.
We retain our consumer over industrial focus this year.
We moved to overweight on consumer staples last month, upgraded durables earlier this year, and have been selectively picking other discretionary areas for our India portfolio (select retail, QSRs).
Jefferies
Likely beneficiaries may include goods that are currently taxed 28 per cent such as two-wheelers (Bajaj, Hero, TVS, and Eicher), ACs (Voltas, Blue Star, and Amber Enterprises; marginal positive for Whirlpool, Havells, and Lloyd), and possibly small cars and hybrids.
Cement also stands to benefit.
The removal of the 12 per cent tax slab will be positive for processed foods, footwear (less than Rs 1,000), hotels (less than Rs 7,500), garments (over Rs 1,000), and farm equipment.
Relief in headline tax rates for insurance premium is also likely.
The festive season shopping will start from mid-September.
The implementation of GST rate changes on consumer durables needs to be timed accordingly.
The GST rate cut will also have some dampening impact on the Consumer Price Index (CPI) well into the second half of FY26, and may raise hopes of further rate cuts by the Reserve Bank of India (RBI).
Emkay Global
The sector rotation theme of consumption over capex will see further traction.
However, the net impact on aggregate demand will hinge on how the government offsets the resulting revenue loss.
If fiscal targets are to be maintained, this gap is likely to be bridged by reducing other expenditures, limiting the overall lift to demand.
However, all else equal, such tax changes should boost consumption in FMCG, consumer durables, auto, cement, and similar sectors, with insurance also seeing gain.
Motilal Oswal Financial Services
Key sectors that stand to benefit include consumer staples (through better demand, lower raw material costs), automobiles (four-wheelers), cement, hotels (sub-Rs 7,500 room rate inventory), retail (footwear), consumer durables, logistics, and quick commerce. Some of the key stock beneficiaries include Hindustan Unilever, Britannia, Maruti, Ashok Leyland, Ultratech, Voltas, Delhivery, HDFC Bank, and Bajaj Finance.
ICICI Securities
Among stocks, select packaged foods like Nestle, HUL, Tata Consumer, AWL Agri, and Patanjali may benefit from the rejig. GST rejig on ayurvedic products (chyawanprash, ethnic, and OTC products) is likely to benefit Dabur and Emami.
In discretionary items, Go Fashion, Vishal Mega Mart, and Page Industries are likely to gain.
Blue Star, Voltas, Havells (Lloyd), and Whirlpool could benefit in the white goods and durables categories.
Hatsun, Dodla, and Heritage in the dairy segment, and Maruti Suzuki, Hero MotoCorp, and Mahindra & Mahindra in automobiles are expected to be the key beneficiaries.
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