Sensex, Nifty likely to be bumpy post GST implementation

The market is expected to remain volatile and in a corrective phase post Goods and Services Tax (GST) implementation since people are not fully ready for its execution.

The Goods and Services Tax (GST) -India's biggest tax reform since independence was implemented by the Narendra Modi government on July 1 after 17 years of debate.

Also read: 'GST roll-out will create one lakh jobs in next three months'

This week, the street could watch out for new cues for GST implementation.  While some hiccups are expected,  a smoother implementation could lead to a rally in the market.

"Investors will be closely watching how the GST implementation proceeds. Investors will be keenly awaiting minutes from the Federal Open Market Committee's June meeting," V K Sharma, Head of Business  PCG, HDFC Securities said.

The markets saw a strong rally in the first half of 2017, with the Sensex rising 16.13% and Nifty climbing 16.31%.

While the BSE Midcap index rose 21.7%, while BSE Smallcap index rallied 27.93% in the first half of 2017.

Also read: GST effect: iPhones get cheaper; Apple cuts iPad, iMac and Watch prices too

"The new regime is expected to re-colonize Indias tax system but may face some initial hiccups on the implementation front. With valuation over-stretched, market is now facing selling pressure on lack of new growth triggers. We believe that GST could be one of the hooks that the market will justify for correction to set in," Vijay Singhania, Founder- Director, Trade Smart Online said.

This week would also see stocks reacting to monthly auto sales numbers, he said adding global cues, crude oil and currency activity will also act as key factors that will dictate the direction.

"GST is likely to result in a near-term disruption as this is a massive reform which is getting implemented in our economy," Mayuresh Joshi, Fund Manager, Angel Broking said.

"We expect markets to remain volatile and track the management commentary on how they are adjusting to the issues arisen due to the GST," Joshi said.

Sector-specific movement can be seen after the launch of the much-awaited GST, experts said.

Last week, the Sensex recorded a fall of 216.60 points, or 0.69 per cent, while the broader Nifty lost 54.05 points, or 0.56 per cent.