The Hindu Business Line : Consumer durables index clocks higher growth

Mumbai, Dec. 19 With the purchasing power and the disposable income of the average Indian on the rise, the spending on luxury and comfort goods is growing as well.

A study published recently stated that the percentage of GDP spent on comforts and luxuries has increased by 4.9 per cent in the last three years.

Consumer durables index

This reflects in the performance of the consumer durables index. This year the index clocked a growth of 14.2 per cent, the highest it has seen in four years’ time. December has been a good month for the sector with many stocks touching their 52-week high.

Blue Star touched a high of Rs 500 on Tuesday. The others include Gitanjali Gems Ltd, Rajesh Exports and Trend Electronics. The BSE Consumer Durables index on Wednesday was up 1.03 per cent and closed at 6122.32. Titan was up by 2.89 per cent to end the day at Rs 1501.80, Videocon rose by 3.12 per cent and closed at Rs 638.70 and Mirc Electronics was up by 1.15 per cent.

“The economy on the whole has been doing well, with purchasing power and the disposable income increasing, salary of the corporate world on the rise, demand for real estate also rising and more money being generated from the equity markets; people definitely have more money. The entire scenario has changed from what it has a few years back and people are willing to spend on not just necessities but other goods too”, said Mr Gopal Agarwal, Senior Fund Manager, Mirae Asset Global.

Studies show that the spending on necessities has reduced by 16.8 per cent with more people spending on comfort goods.

Although this sector may not out perform the market, it is a fall back option said an analyst. “The consumer durables sector is a safe bet if one wants to hedge against the market”, he added.

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