FMCG, Auto & Agri On High Post GST’s Blockbuster Entry

Market This Week

The Bulls took the charge of the market this week as the market rallied after the successful implementation of Good & Service Tax (GST) on 1st July 2017. As of now GST has been implemented all over the country including Jammu and Kashmir and running successfully barring some of the rate revivals on goods and services. Most of the businesses like FMCG, Auto, Agri products, Electronics companies have reduced their product prices after receiving input tax credit benefit from GST.

Increasing tension in North Korea and the Indo-China border issue would be a momentary hurdle because all these countries understand the implications of war. A good recovery has been seen in the beginning of this week over increasing tension in the middle east but increasing supply from one of the OPEC countries taken to below $45.

Movers & Shakers

Hester Biosciences rallied over 25% this week as the company is going to give dividend on 28th July 2017 and another positive news is that it has received an optimum amount of benefit in GST through input tax credit. Sahara Housing rallied above 50% over some of the positive news in the group from the supreme court order. On the other hand, Religare Securities tanked as RBI raised concern over 1845 crore corporate loan.

Key Market Drivers

The biggest tax reform in decades has been implemented in this week i.e. GST. GST has two main benefits in long term, 1. it erases the cascading effect of tax and it will reduce the prices of products and services. 2. It has the benefit of input tax credit which simplifies the supply chain and increases the tax base. Due to the successful implementation of GST, many of the rating agencies upgraded the India's GDP growth target in future. There is a mixed trigger for crude oil in the market as increasing supplies from one of the OPEC countries after deciding to cut production is putting pressure on the supply side while the increasing geopolitical tension in North Korea and the Middle East are keeping demand on the upside.

Event Watch

After the successful implementation of GST, the next trigger would be Consumer Price Index (CPI) numbers (YOY basis) and Wholesale Price Index (WPI) numbers in the next week. CPI measures the change in the price of goods and services on a retail basis which affects the common consumer of the country. If numbers come more than forecast it will have a positive impact (Bullish) on INR while inversely weaker outcome than forecast will negatively impact (bearish) INR.

WPI numbers of Fuel, Food and Inflation are also expected this week. It calculates the wholesale price of products and services. Any change in WPI numbers has a potential to have a wide impact on the consumers.

Stocks To Watch

Hester Biosciences is on the upside while Tata Communication is on the downside.