GST And Its Potential Impact On The Indian Equity Market…
Aug 10, 2017

Author: PersonalFN Content & Research Team

Stock markets reflect people’s opinion about an economy.

So when the BSE Sensex hits an all-time high in India, it suggests investors are optimistic about the future of the Indian economy. Needless to say, when the bellwether stock market index touches new lows it suggests that investors are inclined to be more pessimistic about the future.

But like the weather in the Andaman Islands, market opinion swings too quickly without fair warning. This confuses the majority of investors. Big money is made or lost when the market is in a confusing state.

You will find some eternal bulls on the one side of the spectrum who keep reiterating the good things about the stock markets, almost always. And there will be the perennial bears on the other hand who will be consistently engaged in fault-finding and painting a gloomy picture.

But if you want to be a successful investor, you can’t be friends with any of these camps forever. Do you remember how diverse the opinion of experts was about the demonetisation and its impact on the Indian economy?

Is GST going Demonetisation way?

(Source: BSE, PersonalFN Research)

Looking at the movement of equity indices, it seems markets are no more interested in perceiving demonetisation as a threat. But the general market opinion about the same event was negative around 6 months ago.

See how quickly it has changed!

After a couple of quarters, markets may completely forget about the much-discussed negatives of demonetisation. Why? Probably because they have done a careful assessment of an event and might have concluded that the demonetisation had a temporary effect on Indian economy.

You might be wondering why discuss all this now?

There’s a reason…

Like they did at the time of demonetisation, markets have now entered a similarly confused state; after the implementation of Goods and Services Tax (GST). Experts expect markets to be extremely volatile and some are even predicting a downfall, staring at high market valuations. Well, there’s no denying that an expensive market only needs an excuse to fall. But there’s always a possibility that, markets may prove all sceptics wrong or fundamentals may improve dramatically to support high valuations. Test Data

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