The government’s proposal to simplify the Goods and Services Tax (GST) structure by scrapping the 12% and 28% slabs and moving to a two-rate system of 5% and 18% is set to put several sector stocks in focus when markets tomorrow. While these changes are still at the proposal stage, Prime Minister Narendra Modi has assured that a “Diwali gift” in the form of GST rationalisation is on the way.
According to analysts, the biggest boost could come for the cement sector, where the current 28% GST is likely to be reduced to 18%. A cut of this magnitude would directly lower cement prices, potentially improving volumes and demand in housing and infrastructure projects. Stocks such as Ultratech Cement, Shree Cement, Ambuja Cements, Dalmia Bharat and ACC will be in sharp focus.
The automobile sector is also expected to benefit significantly, as cars, SUVs and two-wheelers currently taxed up to 50% could see lower effective taxation. This could make vehicles more affordable and revive demand. Key stocks to watch will include Maruti Suzuki, Tata Motors, Mahindra & Mahindra, Bajaj Auto and Hero MotoCorp.
Consumer durables and white goods makers are likely to be another big beneficiary. Products such as air conditioners, refrigerators, washing machines and televisions currently taxed at 28% may fall to 18%, giving a boost to festive season demand. Companies such as Voltas, Havells, Whirlpool, Blue Star and Dixon Technologies could see renewed investor interest.
Additionally, real estate and housing-related companies may benefit indirectly from lower input costs. Developers and construction players such as DLF, Godrej Properties, Oberoi Realty and Prestige Estates could be in play.
Other categories like electronics, textiles, processed foods, fertilisers, renewable energy and insurance services are also expected to see positive impact from rate rationalisation, though the fine print will determine the extent of benefits.
Overall, the GST proposal is seen as a move to simplify compliance, lower costs and spur consumption, which could lift sentiment across consumption-linked and infrastructure-driven stocks in the near term.
