Market Goes U.P, U.P And Away

Market This Week

Market is looking like it has cleared all the hurdles and it's breaking benchmark levels everyday. As anticipated last week, FIIs have started heavy buying in Indian equity market post elections and so has DIIs. Midcaps as well as large caps are hitting their 52-weeks high levels. Reason behind this juggernaut run of D-Street is US Fed ended on anticipated note with the rate hike. No surprise game from US Fed. Post US Fed, time for GST to roll over. Positive events are hitting all over the market.

Movers & Shakers

The government is expecting that the C-GST, I-GST, UT-GST and the GST Compensation laws will be approved in the current Parliament session and the state legislatures will soon clear the way for S-GST bills so that the new indirect tax policies can be rolled out from July 1. In the near future there are no triggers which have the potential to move the market. However, the build up for the swift passage of GST has started to gain ground.

In other news, the Goods and Services Tax (GST) Council on Thursday capped the proposed cess on aerated drinks and luxury automobiles at 15% and 290% on cigarettes. Also, the council approved the State GST and Union Territory GST laws. Approval of these laws coupled with changes in the Central GST and Integrated-GST laws will pave the way for introduction of the legislation in state assemblies as well as in Parliament. The proposed GST cess would be in addition to the imposition of GST at the highest rate of 28%.

Key Market Drivers

The market embraced the UP verdict with the open arms, all the major companies and sectors gained out the positive sentiment. Sectors like Chemical, Real Estate and NBFCs were particularly upbeat as all the companies in these sectors recorded good numbers.

After the five states' elections, the next game-changer might be GST. All the sectors stand to gain a lot from the GST policies and subsequently investors too will gain a lot through the reviewed policies. Sources suggest that there has been a lot of deliberations over cess. GST Council will take a call on how much cess is to be imposed. For cigarettes and other tobacco products such as pan masala and gutka, the GST Council has given three caps -- if the total cess imposed is specific, if it is ad valorem and a mix of both. How the companies will react to this remains to be seen.

Event Watch

As we are inching towards the end of the final quarter of FY16, all the companies will be out with their Q4 results. For an eventful quarter which saw events like Union Budget, RBI meet, Fed rate hike and five states election, good quarterly results would be a perfect finale.

Another major event to watch out for is GST. The primary objective of GST is to replace multiple state and central taxes on goods and services with a single levy. Rules that are related to payment, registration, in-voice refunds and returns have already been approved. GST Council is now looking into clearing rules dealing with composition and valuation.

Stocks to Watch

Uflex Ltd is on up side while Bharti Airtel is on down side.