Budget, FMCG and Auto Sector

Budget 2017

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 Highlights

  • Reduction in Personal Income-tax between 2.5 lakh to 5 lakh from 10% to 5%.
  •  No transaction above 3 lakh would be permitted in cash subject to certain exceptions
  • A DigiGaon initiative will be launched to provide tele-medicine, education and skills through digital technology.

Government has now revealed its Budget for 2017. As the experts were expecting, government has decreased the tax rates for Public. Importance were shown in Budget to Boost Housing and Education Sector. Prices of different Goods has also been affected. To make Infrastructure more convenient and nice looking, government has proposed different projects worth more than 2 lakh crore. Government will also assure that Road Projects and few other projects would be completed at time.

Government had doesn’t made Budget for only Agriculture sector neither for only Infra and Housing Sector. Budget is made equally beneficial and important for all sector. This time, government has taken one more step to promote Eco-friendly initiative. Solar Park with capacity 20,000 will be contructed. It is also proposed to feed about 7,000 stations with solar power in the medium term. By 2019, all coaches of Indian Railways will be fitted with bio toilets. Government is also promoting Digitality, which clearly reflect in budget. Although, Budget for 2017-2018 is good and will positively affect the GDP growth of our nation.

Development and FMCG sector

cheers-839865_640FMCG or Fast Moving Consumer Goods said to be those goods and product having lower price and are sold quickly. Cigarettes, Softdrinks, food product, Personal care and hygiene products are the examples of this sector. Annually, our FMCG sector is growing 11 percent. And this growth is unbreakable or unstoppable because the rising population will result in increase capacity of purchasing goods which cause stable growth in consumer sector. Companies in FMCG sector generally retain a very small portion/percentage of margin which resulted in huge production of these goods to earn better profit from lower margin.

Events like Holi, Diwali and sometimes holidays affect the major portion of Production of company. Slightly up and down in Growth Numbers of FMCG companies are attached through them. Like in case of Patanjali, that can said to be a big storm for lower Capital FMCG Companies which also affected the Income and profit of Bigger Companies like HUL, Dabur, ITC etc. But as now, numbers of such companies are becoming again stable. Patanjali has captured as much as market share that was obtainable for him. Now, Growth Numbers of Patanjali doesn’t remain like 200 percent jump, 150 percent jump. With passage of time, GDP contribution of different FMCG companies is likely to be rise with stable growth.

Although, FMCG sector is a case of long term and needs to be given proper time to get better returns. Those who wants to buy a stock with perspective of long term for about 4-5 years can invest in FMCG sector. Tata Global Beverages, Marico and ITC are my top pics that i would advice to buy if you wish to invest in FMCG sector.

Auto Sector

corvette-171422_640Automotive Industry in India is one of the largest Industry controls around 8 percent of GDP. Annually, Our auto industry manufacture and produces 28 million vehicles. With market share of 81 percent, two Wheelers segment is the leader of Auto industry. On an average, Auto Industry of our nation is increasing by 8 percent annually.

With the passage of time, having a Personal Car is becoming everyone’s dream. But with coming of Taxi companies like Ola and Uber, this dream has came true at Zero cost. In just Rs.100, People can feel the ola as their personal car. But this doesn’t mean that demand is decreasing either it had a positive impact on Auto Industry. Many Auto Companies like Mahindra are working together with ola to gain better and  hold their market share. Taxi companies has not only brought a reform in Auto Industry, it has made Car Finance more easier and beneficial. As the Auto sector would continue to unlock new opportunities and events, the prices of auto Stocks would continue to climb with stable interest of investors.

Investors those wants to invest in Auto sector should invest in companies having high potential and low market value. Through analysing Sales Number, Financial Numbers and Potential, i would advice to buy Bajaj Auto, M&M and Maruti Suzuki for long term.

 

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