Union Budget 2023: BSE FMCG Index soars whereas BSE Auto Index falls

After jumping over 1% in the morning session, the Indian stock market traded flat on a closing basis.

On Wednesday, the benchmark India indices were trading flat, BSE Sensex was up 0.14% at a level of 59,631.43 and Nifty-50 Index was down 0.29% at a level of 17,611.80.

BSE FMCG Index soared 0.75% led by Zydus Wellness, ITC Ltd and Varun Beverages and BSE Auto Index plunged 0.90% dragged down by Samvardhana Motherson International Ltd, TVS Motors and Mahindra & Mahindra.

FMCG Sector updates:

The government will run the Free Food Scheme for the next one year. The government will also broaden the market for dairy and fishery products. The government will launch a sub-scheme under the PM Matsya Sampada Yojana with a Rs 6,000 crore budget to help those involved in fisheries even more. Also, certain cigarettes would face a 16% increase in NCCD (National Calamity Contingent Duty).

Rural demand has been recognised by the FMCG industry, and now is an excellent time to invest in additional capital to improve supply-chain efficiency at the local level. The government should consider lowering personal income tax rates in its upcoming reform push, as this would increase disposable income and stimulate the demand cycle.

Auto Sector updates:

Customs duty on capital goods/machinery for the manufacture of lithium-ion cells for use in batteries of electrically operated vehicles is eliminated in the Union Budget 2023. (EVs). The move is expected to help lower the cost of EVs in the country.

Finance Minister Nirmala Sitharaman said, “To further provide impetus to green mobility, customs duty exemption is being extended to import of capital goods and machinery required for the manufacture of lithium-ion cells for batteries used in electric vehicles."

Investors should keep an eye on both the FMCG sector and the Auto sector for upcoming trading sessions.