Skip to main content

Non- passage of GST Bill unlikely to rock markets

By
The markets are keenly eyeing the prospects of the goods and services tax ( GST) Bill in the monsoon session of Parliament. While passage will be sentimentally positive for the Street, any negative development could trigger a knee- jerk reaction from the markets with a limited downside from the current levels, analysts say.
According to reports, apart from GST, there are 25 Bills that form a part of the legislative agenda of the National Democratic Alliance ( NDA) government. Experts say the All India Anna Dravida Munnetra Kazhagam (AIADMK) will play a pivotal role in passage of GST. Even if the Congress votes against it, support from the AIADMK, either through abstaining or voting in favour of the Bill would help clear the GST Bill in the Rajya Sabha.
“If GST is passed in the Rajya Sabha, it will easily be cleared by the mandated 50 per cent of states, as 20 out of 29 states and two Union territories are ruled by either the NDA or with states in favour of the Bill. In such a scenario, GST rollout will not be an issue once the Rajya Sabha clears the Bill,” say Amit Gupta, Raj Deepak Singh and Sanjay Manyal of ICICI Securities in a recent report.
Since presentation of the Budget in February when sentiment turned positive for the overall market, the S& P BSE Sensex and the Nifty 50 indices have gained around 20 per cent and 21 per cent, respectively, while the S& P BSE Mid- cap index has surged 26 per cent during this period.
Analysts say the upbeat sentiment is unlikely to change in a hurry given the favourable domestic cues even if the GST Bill is not cleared in the upcoming Parliament session, unless there are negative global headwinds.
GChokkalingam, founder and managing director of Equinomics Research & Advisory, says: “ Though the markets expect the GST Bill to be passed in the coming monsoon session of Parliament, I expect the Bill will be cleared next year, only after the state elections are over and if the NDA can improve its overall tally in the Rajya Sabha. In case the Bill doesn’t go through in this session, there might be a knee- jerk reaction from the markets, which can correct two- three per cent as a result. While there may be some disappointment, a big crash is ruled out.” An overall improvement in tax collections, a good monsoon, healthy foreign flows and a hope of improvement in corporate earnings are some of the factors that analysts list that are currently fuelling the market rally, in the absence of negative global cues.
“GST is one of the positive factors but not necessarily the only factor that is driving the markets. Though the markets expect the Bill to be passed in the monsoon session, even if it doesn’t sail through, the markets will take it in its stride.
The downside will be limited in case Parliament doesn’t approve the Bill in this session,” said Jagannadham Thunuguntla, head of fundamental research at Karvy.
Business Standard New Delhi,14th July 2016

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more