GST, Sensex rises 300 pts

Government asks all departments to ensure there are no shortages, keep watch on prices

MUMBAI:Benchmark equity indices rose on Monday, the first trading day after the rollout of the Goods and Service Tax (GST), as investors cheered the implementation of the tax reform.

More companies announced price cuts, passing on to customers the benefits of lower taxes under the new indirect tax regime that took effect on July 1. Top civil servants reviewed the impact of GST on consumers and decided to take all possible steps to ensure that there is no shortage of goods or unwarranted price rises during the transition.

Investors gave the thumbs-up to GST, driving the Sensex up 300.01 points, or 0.97%, to 31,221.62 points at the close of trading. The NSE Nifty climbed 94.10 points, or 0.99%, to 9,615 points.

Firm Asian and European markets also kept investor sentiment upbeat.

GST, which subsumed 17 taxes and dismantled inter-state barriers to trade in goods and services, has been billed as the biggest tax reform in the history of independent India, one that would enhance the ease of doing business in Asia’s third largest economy.

Analysts and asset managers said it was too early to assess the near-term impact of GST’s implementation, and that markets would closely watch for hurdles along the way.

“GST implementation glitches can cause some disruption. However, it is difficult to assess the impact until we see some evidence, For now, it seems people have digested the change of tax regime,” said Rakesh Rawal, CEO of private wealth management at Anand Rathi Financial Services Ltd. “Going ahead, market will take its cues on how the implementation pans out.” Others agreed.

“GST-led worries are discounted in the price. There would be some amount of aberration in June-quarter corporate earnings due to de-stocking. Wholesale sales have been weak, which may reflect in the report card,” said Vaibhav Sanghavi, co-CEO, Avendus Capital Public Markets Alternative Strategies Llp.

All sectoral indices ended with gains. The BSE FMCG Index closed 3.4% up on expectations that GST would reduce retail prices and boost sales.

Passing on to customers the benefits under the new GST regime, automakers on Monday announced price cuts ranging from ₹350 on two-wheelers to ₹3 lakh on Ford India Pvt Ltd’s sports utility vehicle Endeavour.

Over the weekend, products ranging from Apple Inc’s iPhones and iPads to Hindustan Unilever Ltd’s Rin detergent and Pears soaps became cheaper as companies passed on the benefits of lower taxes to consumers.

“Government has asked all the departments to ensure that there is no shortage of products and consumer items in order to keep a check on prices. Special emphasis was laid on keeping prices of essential commodities under check,” said an official statement from the finance ministry.

The finance ministry also announced that most of the states have dismantled border check posts. Twenty-two states including Andhra Pradesh, Bihar, Gujarat, Karnataka, Kerala, Madhya Pradesh, West Bengal and Delhi have abolished check posts while eight others such as Assam, Himachal Pradesh, Manipur and Meghalaya are in the process of abolishing them.