Mumbai : The impact of Goods and Services Tax (GST), coupled with global cues, are expected to determine the trajectory of key domestic stock exchanges in the upcoming week.
According to market observers, key macro-economic data points released after market hours on last Friday, like the eight core industries (ECI) figures, external debt and fiscal deficit data, will heavily influence the domestic equity markets.
“Markets this week will focus completely on the GST rollout and the impact of the same on the economic activity in the country,” Devendra Nevgi, Chief Executive of Zyfin Advisors, told IANS. “The traditional GST winners and losers will be in limelight. Global cues, especially from the movements in IT stocks in US, will impact local prices in the sector.” The country’s biggest indirect tax reform — GST — was launched on July 1, Saturday. “Investor’s sentiments and expectation may not be met (by GST) in the short term. But it will be positive for listed entities over the medium to long-term,” Vinod Nair, Head of Research, Geojit Financial Services, said.
“On a worst case scenario, we can expect a correction in the range of 4-8 per cent in broad indices.” Besides GST rollout, positive macro-economic data points like a higher ECI figure for May 2017 will be other major theme for the stock markets.
The output of India’s eight major industries during May grew by 3.6 per cent from a rise of 2.8 per cent reported in April 2017. However, country’s fiscal deficit up to May during the current fiscal touched Rs 3.73 lakh crore or 68.3 per cent of the Budget estimates for 2017-18. Analysts pointed out that monthly automobile sales figures and the Purchasing Managers’ Index (PMI)’s manufacturing and services data will be other major sentiment drivers. “Coming week would see markets react to monthly auto sales numbers.
Among the macro-economic data, June Nikkei Markit Manufacturing PMI and Nikkei Service PMI are also scheduled to be released,” Vijay Singhania, Founder-Director, Trade Smart Online, told IANS. In addition, global cues especially international central banks’ action, crude oil price movement and currency activity will also act as key factors that will dictate the direction in the coming week.