The Sensex and Nifty ended slightly higher as investors welcomed the long-awaited passage of the Goods and Services Tax (GST), though the gains were tempered by concerns about the amount of work needed to bring the reforms into reality.
The broader NSE index ended up by 6.25 points or 0.07 per cent at 8,551.10, after rising as much as 0.66 per cent earlier in the session.
Similarly, the BSE index Sensex ended up by 16.86 points or 0.06 per cent at 27,714.37, after gaining as much as 0.81 per cent.
Among BSE sectoral indices, realty index gained the most by 2.25 per cent, metal 1.53 per cent, auto 1.35 per cent and infrastructure 0.92 per cent. On the other hand, consumer durables index was down 0.82 per cent, IT 0.53 per cent, TECk 0.31 per cent and banking 0.17 per cent.
Logistics stocks drew mixed reactions today as uncertainty still prevailed in markets with regard to actual roadmap to GST implementation after the Rajya Sabha passed the historic Bill yesterday.
Auto stocks rallied sharply in the morning trade on the bourses as the Rajya Sabha had yesterday passed the historic GST Bill, which is expected to lower the tax administrative cost for the sector.
Top five Sensex gainers were Tata Steel (+4.6%), Tata Motors (+4.41%), Bharti Airtel (+2.18%), Adani Ports (+2.06%) and Hero MotoCorp (+1.79%), while the major losers were Asian Paints (-1.78%), Lupin (-1.32%), Infosys (-1.18%), Coal India (-0.75%) and M&M (-0.74%).
GST Bill
The GST passage in the Upper House of Parliament paves the way for the roll-out of India's single biggest tax reform since independence, one that harmonises 11 state and central levies into a national sales tax and cuts business transaction costs.
Its passage marks a victory for Prime Minister Narendra Modi as he seeks to boost growth in Asia's third-largest economy, and is a relief for investors, especially overseas, who'd been growing impatient about the pace of reforms.
But the government and companies from sectors such as automakers and logistics will now need to implement new technology structures in preparation for the new taxes.
Nomura analysts also warned the GST could negatively impact the economy in the short-term as higher taxes hit consumption and push up inflation by 20-70 basis points in the first year of implementation.
“Contrary to general perceptions, we believe that the short-term impact of the GST could be mixed, but the long-term impact will be clearly positive,” Nomura said in a research note.
Also, market experts believe the run up in the stock prices of companies benefiting from GST was pretty much factored in by the markets and expect profit-booking in such companies to continue for a while until more clarity emerges on the Bill.
Global markets
The British pound edged up on Thursday as investors counted on the Bank of England to cut interest rates to a record low, while a rebound in oil prices from four-month lows lifted Asian stocks.
Wall Street had edged higher on Wednesday after a sharp rise in oil prices boosted energy shares, while encouraging data on the labour market helped financial stocks.