The much-awaited Goods and Services Tax (GST) Bill is expected to be passed in Rajya Sabha on Wednesday after an-all party consensus was reportedly achieved on the key amendments, including the scrapping of 1 per cent additional tax provision and grant of more powers to states for providing them full compensation for a period of five years. Domestic stock markets along with other sectors have been keenly watching the progress on the Bill ever since it was passed last year by the Lok Sabha. Expectation over a positive outcome has been driving the equity markets since the monsoon session of Parliament began with benchmark indices BSE Sensex and NSE Nifty jumping over 3 per cent in July. The Indian rupee appreciated by around 40 paise against the dollar during last month.
Analysts have mixed opinion about the impact of GST on the equity market and rupee’s movement. While some believe that it may have long-term imapct on the stock markets, others believe that it may not lead to any immediate impact. Experts have given a target of 30,000 for Sensex and 10,000 for Nifty if GST Bill is passed in the Rajya Sabha during the ongoing Parliament session.
Sudip Bandyopadhyay, chairman, Inditrade Capital said, “Stock markets will see a spike after GST is passed, but it will also see profit-booking in the short-term.” Bandyopadhyay expects Nifty to touch 10,000 if GST becomes a reality.
Pankaj Sharma, head of equities, Equirus Securities said, “Though it may not lead to an immediate effect on markets, GST is a very big and much-needed structural reform. More importantly, the timing to get it passed in the current monsoon session of parliament has not really looked better ever. If the GST bill goes through, it will be an important sentiment boost for the markets. The primary beneficiaries should be the ones where there is a large presence of unorganised companies in the sectors these companies operate in.”
There are other experts who see stock markets to have a positive impact as GST implementation as it may reduce paperwork and enable efficient trade across, supporting organised market growth in India.
While giving a Sensex target of 30,000 and 9,100 for Nifty for next one year, Pankaj Pandey, head of research, ICICI Scutities said,”In the short-term some profit-booking could be seen in the markets and Nifty can touch 8,400.” However, he further added that broader markets will surge more as compared to benchmark indices.
On rupee, experts believe that although the news on GST is supporting the currency movement, it may impact besides a short-term surge. Anindya Banerjee, currency analyst, Kotak Securities said, “GST is one of the tactical themes supporting the rupee over the past month or so. A passage of the same is known event and hence should not have much effect beyond a couple of days of appreciation”.
He however further added that rupee appreciation will be limited by intervention of RBI. “We need to remember that GST is a process and quite a long and difficult road, and not an event. Therefore, once the passage happens markets may not have much to rejoice about. The focus will shift towards implementation and the associated costs of the same, which will be front loaded, with benefits largely deferred. Hence, we expect a range of 66.30/50 and 67.10/20 over the near term,” he said.