GST: Boon to Indian Market as NIFTY and SENSEX Soar to New Heights

GST has caused a major stir in Indian economy since its implementation on 1st July 2017. GST can be viewed as a major influential factor which helped boost the economy on upward momentum and provide a favourable economic scenario that would help with creating a positive sentiment across all sectors in the market. Since its implementation stock market has seen one of all time high uptrend momentums with the major indices continuing to breach new heights and the market on all sectors seeing stable growth as indicated by performance of benchmark indices.

There has been some major improvement in our country’s economic situation such as

  1. increase in the number of tax payers
  2. increased compliance for tax policies
  3. facilitating better and faster transportation of goods across the country eliminating the need for State-based check posts
  4. increasing digitized transaction of funds
  5. creating a stable market environment across the country, with increased chances of stable growth in the long-term across all sectors, resulting in more jobs and better chance at increasing investment with positive return expectations.

Another Key factor to be noted besides the above mentioned list of changes is reduction of tax burden on the end user/customer (removal of cascading tax effect) by implementing input tax credit system. Under this system the tax already paid for inputs is taken off the taxes to be paid for the final product, or output. This way more people pay taxes instead of the consumer bearing the burden of taxes levied at every step of manufacturing. However the implementation of GST caused stress in the short term, slowing down inflation and creating a short term negative economic scenario.

This negative scenario has been constantly dealt with on various occasions in the 101 days since GST came under implementation. A few examples that could be noted are:

  • On August 5, the GST Council lowered tax rates on a few services covering textile sector, goods transport agencies, car rentals and tractor parts among others.
  • Two days later, on August 7, the GST Council recommended raising the ceiling of cess on motor vehicles to 25 per cent from the original 15 per cent.
  • On September 20, the government clarified that retaining actionable claims on deregistered brand names would make packaged food taxable at 5 per cent GST.
  • On September 29, the Consumer Affairs Ministry allowed businesses to sell their pre-GST stock till December 31.

Many more changes were made during this period such as clarification on employee benefits, cess on tax rates for large SUV cars being hiked by 7% to bring the price on said cars to pre-GST level and so on.

However, the Indian stock market continued to take a huge bearish dive on its bull run from negative global cues. This trend changed after the latest amendments were released regarding GST on 6th October 2017. This triggered a positive market sentiment that pushed Nifty back to the 10000 point level despite major indices in the Asian market taking downtrend movement on global cues from N.Korean woes, resulting from the latest change in the country’s highest governing body and a possible threat of another nuclear test.

The latest amendments to GST are easing in compliance norms for SME’s & exporters and reducing tax rate for 27 items. SME’s and exporters with annual turnover less than INR 1.5 Crore now have the option to move under Composition Scheme of GST where the businesses can pay their taxes on quarterly basis instead of monthly basis. The threshold value for many businesses such as traders, manufacturers and restaurants has been increased from INR 75 lakhs to INR 1 Crore.

The companies from the above sector that meet the required condition are to pay standard tax rates fixed at 1 per cent for traders, 2 per cent for manufacturers and 5 per cent for restaurants. There are two more changes to be noted regarding the amendments on GST; they are regarding reverse charge mechanism and held-up working capital.

The reverse charge mechanism is being suspended till March 2018. This rule shifts the liability to pay the tax on the buyer rather than the seller and kick in if a supplier is not registered under GST to check tax evasion.

For exporters who had complained their working capital was locked up from July & August GST payments, the GST council meet told the government to start issuing refund cheques from 10th October to resolve liquidity related issues. By 1 April next year, the GST council also targets to have e-wallets for every exporter where a notional amount will be credited as an advance credit to pay their taxes.

The Council decided to continue with two pre-GST era schemes that allow duty-free sourcing of materials for export production till March 2018, a move that will improve the liquidity of exporters by preventing their working capital from getting locked up in tax procedures. It has also decided to clear all tax refund claims of exporters for July by 10th October and for August by 18th October. It introduced a 0.1% GST rate for merchant exporters, offering relief from the full applicable GST rates on their procurements as merchant exporters do not manufacture products themselves but procure from others for shipping overseas.

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Media, Metal and Energy – The Three Bulls That Helped Nifty on Its Bull Run Across Sept’17

Indian Market saw its momentum reach both historic high and historic lows in the month of September 2017. The market was very volatile across trading sessions on each business day as global cues kept dictating the flow of the market. The major stocks in NSE that are viewed as the nation’s economic status indicators in the form of “Nifty 50 – free float market capitalisation weighted index” took an overall downtrend momentum for majority of the month, and they also reached an all-time high in the early trading sessions. This bullish momentum was supported by positive momentum from stocks in three major sectors.

Metal, Media and Energy are the sectorial indices which suffered the most, albeit the major Bull Run which helped nifty reach all time high, and got back on an uptrend momentum post the 450 point decline on the 3rd occurrence of North Korean/US word war incident.  The stocks from these sectors which should be noted for their bull run are Eros International Media Ltd, NDTV, TV Today Network Ltd, Cyber Media Ltd, ONCG, RIL, GAIL, Tata Steel Ltd, Coal India Ltd and Hindalco Ltd.

Nifty Media saw an overall increase of 0.19% in the value for the month of Sept’17 with Eros International Media Ltd, NDTV, TV Today Network Ltd and Cyber Media Ltd seeing an increase of 7.08%, 67.83%, 50.85% and 56.55% in value respectively. Major factors that drove these stocks on Bull Run are AGM Meetings, Financial Results and Outcome update of AGM sessions. Also to note are factors like update on Eros Media’s film Newton being nominated for OSCAR 2018 and ICICI loan to NDTV promoters with prepayment without penalty which drove the stocks to new highs during respective trading sessions.

Nifty Metal saw an overall increase of 1.22% in value for the month of Sept’17 with Tata Steel Ltd, Coal India Ltd and Hindalco Ltd seeing an increase of 3.57%, 14.57% and 1.51% in value respectively. Major factors that drove these stocks on Bull Run are Outcome update of AGM sessions, Investor/Analyst Meeting Intimation and Investor/Analyst Updates. Also to note are factors like update on Tata Steel’s Joint Venture for creating Steel Enterprise in Europe, Change of director and Distribution of Payment of securities at rate of 11.80% and Hindalco’s credit rate update on NCD’s by Crisil and CARE to AA and AA+ on stable outlook.

Nifty Energy saw an overall increase of 1.35% in value for the month of Sept’17 with ONGC, RIL and GAIL seeing an increase of 8.73%, 0.14% and 15.09% in value respectively. Major factor that drove these stocks on Bull Run was updates on AGM meeting and Outcome of AGM meeting for respective companies. Also to note are factors like update on RIL’s update regarding JIO’s agreement for original digital content from ROY KAPUR FILMS and rumours on DEN Network Merger and ONGC & GAIL’s update on change in directorate which caused the stocks to see an uptrend spike in value.

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Wipro & Tech Mahindra- the stocks that pulled Nifty IT on Bull Run from 18.09 to 22.09

Indian market saw its peak during its bull run last week before it took a steep dive downtrend. This Bull Run was supported by stocks with strong bullish performance from various sectors. Nifty IT was one of the sectors that strongly supported Nifty index as it reached all time high. Nifty IT continued its bull run across all five business days last week despite major stocks and sectorial indices taking downtrend movement on global cues during last two business days.

This Bull Run was supported by stable bullish performance of major stocks such as Wipro, Tech Mahindra and Just Dial Ltd.  Wipro Ltd stocks saw over 0.60% increases in value during the week led by steady buying activity on news of the company landing a new contract from Europe based Energy Company Innogy. The European company is one of major player in European market which deals with Renewable energy and Grid Infrastructure.  The contract is of seven year period where Wipro will use its boundary less data center to manage Innogy’s twin data centers located in Germany with consolidating the data centers IT infrastructure.

Wipro’s stocks are further expected to increase in value in the coming weeks as another of Wipro’s contract with Cloud Genix – A US based IT company that specializes in software based WAN services  is expected to launch WANFreedom a product for enterprise customers to which would help in boosting IT infrastructure and help with cost optimisation (Theory). This technology is currently on rise and is expected to grow over 69.6% compounded annual growth reaching $8.05 billion by 2021 according to IDC worldwide SDWAN forecast 2017-2021 (July 2017 issue). With two major long term projects both expected to boost company’s value in stock price and provide better annual financial results we can expect the company to take bull momentum on long run reaching new heights.

Tech Mahindra Ltd was another similar stock with overall bullish performance for the week which showed a 0.63% increase in value. This Bull Run was influenced by announcement of ESOP – Employee Stock Ownership Plan where 459888 equity shares of value Rs.5/- each was approved by board members during 19.09.2017. This update caused a spike in buying activity which continued across the week and was further boosted on update of Investors Interaction between JP Morgan India and TechM’s leaders on 21.09.2017.

Although Indian market is on overall bearish momentum since trading sessions started for the week, It stocks have started making bullish corrections across the day and is expected to be one of top sectorial gainers as trading session progresses further this week.

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July 19th Market Outlook

The strong momentum in the market through out today’s session. The markets closed at intraday high of 9899.60 level rising by 72 points. Yesterday’s weakness in the market got traders believed of the start of the correction in the markets. The market opened higher from previous day’s close and remained positive throughout the day. Major push came from pharma, FMCG and Oil& gas sector in today’s rise. The NSE Advance Decline ratio was positive quoting 1014:430 stocks.

Today’s top gainers are Aurobindo Pharma, Bharti Airtel, Coal India, Hindalco and ITC. Asian Indices Hang Seng and Strait times closed with gains of 0.5 percent. The European markets DAX and FTSE are trading flat. Now the focus is shifted towards ECB meet on rate outlook tomorrow. EUR/USD pair is already trading 2 years low at 1.15. For Nifty, weekly charts show strength in the index and can go up to 10K level and it needs to clear the 9920-9930 hurdle from where it went down in Tuesday’s trade. The market will also watch on the news of cabinet decision on ONGC-HPCL acquisition.

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Intra Day Market Review – 13.07.2017

Market has remained stable with an upward trend in both NSE and BSE stock exchanges, the positive trend is expected to continue till the end of day , Nifty 50 is seeing a bullish climb with an increase of 0.75% supported strongly by advance made in performance of 39 stocks from multiple sectors such as consumer goods, energy, cement, it, pharma and finance sector.

TCS is back to uptrend movement and is expected to maintain the climb in value even after release of updates from quarterly performance review report scheduled today evening and a raise of upto 2% in share value can be expected based on updates released in today evening news release , however Infosys is still maintaining its downtrend since notification was released on quarterly performance report review which is to be held on friday.

To view the quarterly performance review meeting in live video streaming visit :

Source for video stream and credit : http://investors.tcs.com/investors/Pages/default.aspx

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Today Market Outlook – 13.07.2017

Today’s market will see a positive trend which can be viewed as a result of influence from strong external factors such bullish trend in all major indices across Asian market since market opened early today morning and positive factors which led to bullish closing of US and European market.

We can expect a favorable performance in all major stocks and export services as we can expect market to proceed in a favorable direction due to bullish market situations and stable economy in both internal and external markets. Support and Resistance for Nifty 50 can be expected at values 9780 and 9955.

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Stable Global Market Performance

US and European markets closed on positive note when market closed on Wednesday evening , Fed’s Beige Book release which stated that US economy is on slow to moderate and modest to moderate growth and  Janet Yellen’s testimony at congress where she stated that “Because the neutral rate is currently quite low by historical standards, the federal funds rate would not have to rise all that much further to get to a neutral policy stance” which can be taken up as an indirect indication that although gradual rate hikes can be expected to maintain stable economic growth the interest rate hikes will not be made on huge scale.

This proved to be a huge catalyst for positive trend the US market took towards end of day. If the gradual growth is to be expected in a slow to moderate pace as mentioned in the Beige book , we can expect a stable market with a bullish trend without any historical change in market outlook in long term in both bullish and bearish trend. As long as rate hikes are made on moderate scale to meet up with inflation demands to maintain a stable market we can expect a stable positive trend which is safer and better return rates can be expected for long term investments.

Positive closing of US and European Markets has influenced the Asian markets to move on a bullish trend as favorable market situations can be expected in days to come ahead. Since market opened Thursday morning all major Asian indices has shown a positive performance.

Source : CNBC – Fed Chair Yellen’s full testimony and news reports on Beige Book release

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EOD Overview – 12.07.2017

Indian Market had a stable overall performance for the day , both sensex and nifty closed with a bullish trend. Nifty 50 had a stable bullish trend across the day with an increase of 0.31% and the same was influenced by a strong positive market performance from energy, cement, automobile and finance sectors.

IT sector is taking a bearish trend which is heavily influenced as investors are looking forward to news on quarterly report statements from TCS and Infosys which are to be released on Thursday and Friday respectively. This week saw IT sector opening with a minimum bullish trend of  2%  increase however since updates were released market value of both the stocks have gone down. we can expect a short term volatile market situation till end of week for IT sector.

The highest traded stock for day in terms of value is AUBANK  with a value of  1,08,234.89 in lakhs and highest traded stocks in term of quantity is HUDCO with a volume of 10,47,20,139 , JPASSOCIAT has remained the most traded stock in terms of volume for three weeks in a row and after news release of latest tariff for JIO customers RIL stocks are seeing a bullish trend slowly making its way back into most value of stocks traded.

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Today Market Outlook – 12.07.2017

Market opened today with a positive note despite the Asian markets taking a bearish trend. The global market performance is slow and shows mixed trend with minimal bullish and bearish trends. There is no strong external factor to give a huge boost or make huge market influence.

Indian Stock market has held a stable bullish climb with moderate growth since GST was implemented. Internal factors remain strong and supportive of this positive trend, major positive contributions can be expected from cement , metals , infrastructure , energy and telecom sectors.

Nifty can be expected to reach an upper value of 9810 and if we are to expect a bearish trend the chance of which is very low the value can be expected to remain stable at 9790

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Crawling Global Market

Market performance across the globe was slow on Tuesday, US Markets closed with mixed values, while NASDAQ saw a small increase of 0.27% DOW JONES INDUSTRIAL AVERAGE remained without any change and S&P 500 closed with a bearish decline of -0.08% and European markets  took a bearish trend as well.

Asian market had a similar mixed performance as well, Nikkei 225 and  Hang Seng indices saw a positive outcome at end of day where as FTSE STI and Shanghai Composite took a bearish trend , and the Asian markets have been facing a bearish trend since market opened early Wednesday morning.

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EOD Overview – 11.07.2017

As predicted this morning , today’s market went on regulating the volatile up-scaling which started yesterday after the market reached highest value ever early today morning , market started stabilizing from bubble scenario. Major Nifty – ( Financial , Pharma , metals ) sector saw bearish trend trend today , however the overall contribution from Automobile , IT and cement sectors had a highly positive bullish trend , maintaining the overall stability and closing today’s nifty with a positive value and overall increase of 0.15%.

Today’s major stock players in terms of volume and value are Suzlon which is most number of stocks traded – volume and CDSL retained its position of #1 most stocks traded in terms of value for the day.

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Today Market Outlook – 11.07.2017

Nifty took a record breaking climb when market closed yesterday and internal as well as external contributing factors are favorable for the day. Nifty can be expected to maintain this bullish trend and continue climbing the ladder making history again.

Since Local factors were highly influenced due to Nifty IT and Nifty Financial sector , the same are to be followed today as we can expect them to perform positively as a result of high liquidity influenced market trend currently on move from large capital inherited from Foreign investors and a better overall growth in global market performance.

The current market can be viewed as a bubble which is highly volatile, chances of market going on bearish trend or balancing itself at a certain stable value is possible when strong internal factors take over larger market contributions as opposed to market influenced by external factors.

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A Stable Global Market

The international market has shown a stable bullish trend in market climb during the first day of week and Asian markets are still holding stable with the positive trend with an opening of Hang Seng , Shanghai Composite, Nikkei and STI Indices has a bullish opening with minimum of 0.2% to 1% increase since market opened today.

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