GST rate announced: stocks to watch out for

“No body wants to shock the system" – says J&K Finance Minister and Economist, Haseeb Drabu after the GST rate was announced by Arun Jaitley. Now it is interesting to see which stocks will react to the new GST rates.

 One can expect automobile stocks to trade in the mix as the two wheelers can be expected to be taxed at lower rate and in the four-wheeler segment the compact cars may be taxed at a lower rate. Thus stocks like Maruti Suzuki can react positively with its fleet of small cars. In case the cars across segments are taxed at 28 per cent, the auto stocks will suffer as the expectation was being built in the market that the cars will be taxed at a standard rate i.e 18 per cent, except luxury cars.

The final list of goods which will fall under different tax slabs is awaited and the markets may react definitively only after the list is out in public.However the speculation is rife that Pharma stocks may fall in the 12 per cent category and markets may react positively to the development.

The ease of doing business where the whole country is one market is the biggest gain of GST being implemented and the tax incidence is not the only trigger for stocks, so the markets may take a positive note on today’s development.