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News Topical, Digital Desk : The GST Council has increased the tax on many products and services and put them in the 40% slab. This decision will increase the government's revenue but may have a negative impact on some companies and their shares. Especially companies related to tobacco, sugar drinks, junk food, luxury vehicles, premium bikes and online gaming may face direct pressure. This is a signal for investors that volatility may increase in these sectors in the short term.
Which stocks will be under pressure- ITC, Godfrey Phillips, VST Industries stocks may be under pressure. Because the government has announced 40% GST on tobacco and cigarette products. Along with this, cess has also been imposed. Due to this, there is a possibility of a decline in volume. Therefore, pressure may be seen on the stocks. Because companies may have to increase prices.
PepsiCo (Varun Beverages), Coca-Cola Franchisee- Sugar drinks and energy drinks will become expensive, margin and volume may be affected. Eicher Motors (Royal Enfield)- 40% GST on bikes above 350cc, demand has been hit. Mercedes, BMW, Toyota, Tata Motors (Luxury SUV Segment)- Now 40% + 22% cess on 1500cc engines and SUVs, sales of premium vehicles may be under pressure. Nazara Tech, Delta Corp, Online Gaming Companies- 40% tax on online gaming and casinos, business model may be greatly affected. Nestle, Mondelez, HUL (junk food products)- Packaged snacks and processed food with high sugar/salt will become expensive, volume i.e. sales may be affected. On this, experts told CNBC Awaaz that selling pressure may be seen on these sectors in the short-term. Long-term investors will have to see whether companies pass-on the tax burden by increasing prices or bear it through margins. For now, it would be better to be cautious in these stocks while creating a portfolio. The new 40% slab of GST has brought a revenue hit for some companies. If you are investing in these stocks, then it would be wise to put them in the "watch list" now.
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