Markets cheer GST rollout; Sensex gallops 300 points
Indian markets rejoiced at the far- reaching tax reform GST, sending the benchmark Sensex higher by over 300 points -- its biggest single-day surge in a month -- on emergence of a big rally in FMCG and auto counters.
The across-the-board buying helped the BSE flagship index close at a fresh one-week high of 31,221.62 and took the broader Nifty to finish 94 points higher at 9,615.
Overall business sentiment was buoyed by expectations that the implementation of the Goods and Services Tax (GST) will provide the much needed stimulant to the country's economic growth by transforming the earlier multi-pronged indirect taxation into a 'one nation one tax' system.
"Market welcomed the new tax regime with a positive note while shrugging off the initial hiccups of investors during the last couple of weeks where market witnessed consolidation.
Spending is likely to increase due to the impact of lower tax and increased sales volume will continue to benefit the earnings potential in the future," Vinod Nair, Head of Research, Geojit Financial Services Ltd, said.
The biggest tax reform since independence, the GST, was launched by Prime Minister Narendra Modi and catapults India into a select league of nations that have a single national sales tax. Instilling optimism among investors, Moody's said the GST implementation will be positive for India's rating as it will lead to higher GDP growth and increased tax revenue.
Robust capital inflows from foreign institutional investors (FIIs) and positive global cues further supported the momentum. Shares of the fast moving consumer goods (FMCG) firms led the rally, followed by telecom, metal, realty and auto counters.
Cigarette maker ITC was the top gainer in Sensex, rising 5.70 per cent to end at a 52-week high.
The 30-share Sensex resumed with a gap-up at 31,156.04 and touched a high of 31,258.33 and a low of 31,017.11 before concluding at 31,221.62, showing a smart rise of 300.01 points or 0.97 per cent.