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What should investors make of the goods and services tax (GST)? To start with, GST is not an event that should drive investment decisions, and it is only one among many inputs in the process. GST can cause short-term disruptions that may be both positive and negative; but this is noise that is best ignored. The sensible thing to do is to focus on the medium- and long-term Cheap Patrick Roberts Jersey , to see if revenue improves and if the organized sector and therefore listed companies see acceleration in growth. Here鈥檚 a look at what may lie ahead.
Government ticks major reform box
The government gets credit for sticking to its (revised) deadline of 1 July. GST is a crucial reform that improves its credibility both within and outside the country. Moody鈥檚 Investors Service was quick to announce that GST was positive for India鈥檚 rating as gross domestic product growth will improve and tax revenues will increase. That鈥檚 a pat on the back but stops short of a rating upgrade, and remains at a level that the government is unhappy with.
What should investors buy?
Buy noise filters. Jokes apart, treat all data that you see now with a pinch of salt, as there may be a fair bit of distortion. Consider what happened in June. Many industries Cheap Pablo Maffeo Jersey , such as cars, packaged consumer goods and pharmaceuticals saw traders and retailers cutting down on stock. They wanted to hold minimum inventory to lower risks post-GST. Some retailers even offered huge discounts to dispose their stock.
What does this imply? Listed retailers are likely to report a spurt in sales growth in the June quarter. But that doesn鈥檛 mean consumer spending is rising or that consumer goods companies have done well.
These companies are likely to see a hit on sales in the June quarter. Their dealers were busy clearing inventory and lowered fresh purchases. The so-called destocking means companies鈥?reported sales growth will be lower and may affect profit growth too. As such, the June quarter results will see the first leg of distortion in the sales data.
As an example, month-end retail pharmaceutical inventory was down from about 40 days to 17 days as of 28 June Cheap Oleksandr Zinchenko Jersey , according to market research agency AIOCD Awacs. That means roughly 23 days of lost primary sales for companies.
Companies would have cut production in response and in turn reduced their raw material procurement. These actions should eventually reflect in th. Replica NFL Jerseys Replica Hockey Jerseys Sale Replica Jerseys Free Shipping Replica Baseball Jerseys For Sale Fake Replica Football Jerseys Cheap Replica Jerseys From China Cheap Replica College Jerseys Replica Basketball Jerseys Free Shipping Cheap Replica Jerseys Sale Cheap Replica Jerseys Online