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Indian Indices Continue Momentum; FMCG Sector Up 2.5%
Mon, 22 May 11:30 am

After opening the day on a positive note, stock markets in India have continued their momentum. Sectoral indices are trading on a mixed note with stocks in the FMCG sector, telecom sector and capital goods sector witnessing maximum buying interest. Healthcare stocks are trading in the red.

The BSE Sensex is trading up 133 points (up 0.4%) and the NSE Nifty is trading up 24 points (up 0.3%). The BSE Mid Cap index is trading down by 0.3%, while the BSE Small Cap index is trading flat. The rupee is trading at 64.57 to the US$.

Most of the buying interest is seen on the back of fixing of GST rates this weekend. Finance Minister Arun Jaitley headed Goods and Services Tax (GST) Council has decided to place services under four slabs - 5%, 12%, 18% and 28% compared to the current uniform 15% levy on all eligible services.

Also, greater certainty about a July 1 rollout of the GST regime has supported the positive bias.

Owing to the above development, sectors such as FMCG, utilities, and metal are witnessing buying interest today.

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In our view, implementation of the GST promises to transform India into a single common market and there are many sectors which will gain immensely from this transition.

The tax regime is expected to bring about a structural change in the Indian economy. The implementation of the same is bound to bring more companies under the new tax regime. This will provide a level playing field to organized players that face significant competition from the unorganized segment.

Shrinking share of India's informal economy

The above shift could be a positive for stock market participants too, as it will lead to a value migration from unorganised players to organized players. And companies with solid fundamentals and a competitive moat will capture most of this value.

Our Hidden Treasure team is already on the lookout for opportunities in such companies.

If you would like to dig deeper into the practical implications of GST, I strongly recommend you download Vivek Kaul's free report, What the Mainstream Media DID NOT TELL YOU about GST.

In other news, the government has initiated the work for shifting the financial year to January, from April.

The step is aimed at aligning the financial year with the agriculture production cycle.

Prime Minister Narendra Modi had backed the above idea of January-December financial year last month.

Mr Modi had said that in a country where agricultural income is exceedingly important, budgets should be prepared immediately after the receipt of agricultural incomes for the year.

How the above developments pan out remains to be seen. We will keep you posted on the developments.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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Jan 22, 2018 03:31 PM