The GST Council has cleared the state GST (SGST) and the union territory GST (UTGST) bills in its 12th meet, which meant all five legislations — SGST, CGST, UTGST, IGST and the compensation bill are now cleared — and GST rollout in July looks pretty likely.

The stock market has reacted positively to the news with some stocks such as ITC leading the benchmark indices after the tax structure is announced. A cap on cess applicable on the five commodities under the GST is announced, which some brokerages believe, shows the government intention to bring the GST rates on the commodities in line the existing ones.

Arvind Sanger, Managing Partner at Geosphere Capital said that the market will now look at any demonetisation leftovers in the March quarter, and the transition period where the first half FY18 could be impacted by GST transition.

“Once we get past that, I think we should be okay,” Sanger said.

What’s next?
1. The four legislations (CGST, IGST, UTGST, compensation bill) will now be presented to the Cabinet and then on the floor in the Lok Sabha. The SGST legislation will be presented to the respective state cabinets and then to the various state assemblies, Motilal Oswal Securities said in a note.

2. Apart from the legislative approvals, there two mainstays yet to be passed before the GST can be rolled out. These include formulation of rules and the fitment of various goods/services in the five slabs.

3. Of the nine rules, the four that are left including composition rules, valuation rules, input tax credit rules and transitions rules will be circulated by next weekend. These rules will then be considered and approved in the next GST Council meeting on March 31.

4. It may also need to provide fitment of various goods/services in the five tax brackets. Accroding to Motilal OSwal Securities, this may happen after March 31. While the finance minister Arun Jaitley has not provided a timeline, the government seems confident of rolling out the GST by July 1.

Market outlook
Lalit Nambiar, Senior Vice President and Fund Manager (Equities), Head – Research at UTI Mutual Fund believes that as and when the GST issues are settled, and it is implemented, investors will see the true earnings of India coming through.

“The market would probably be a little better-placed to run up from there. Till that time, we are basically in a situation where one can only hope that the flows to emerging markets resume, now that the pathway as far as the US Fed has become clearer,” Nambiar said.

Where to invest
Jyotivardhan Jaipuria, Founder & MD, Veda Investment believes that one may play out GST by looking at companies which will gain with organised sector becoming a bigger part of the whole market and the unorganised sector losing market share.

“Now in this segment, the next six months will be tough as the GST roll out play out. That is where you have to look for correction. You look for some bad earnings numbers and buy these sectors,” Jaipuria said.