 "Sensex ends flat after rising 224 points")
The benchmark Sensex on Thursday rose as much as 224 points, or 0.8 per cent, after the Rajva Sabha passed the much-awaited Constitutional amendment for a national goods and services tax (GST).
However, it gave up all the gains, to end little changed, on concerns over implementation and impact on companies. The 30-share blue-chip index finally closed at 27,714.37, up 16.86 points or 0.06 per cent, after climbing to a high of 27,921.91.
Although the Street welcomed the Bill's passage on Wednesday night, concerns remain over the further work needed for successful implementation and the time period of impact on corporate earnings (profit). The broader markets also ended little changed.
The government has set a target date of April 1, 2017, for the tax to take effect. "GST is a reform overestimated in the near term, and underestimated for the long term," said Nirmal Jain, chairman of the IIFL Group
Shares of finance and logistics companies dropped on profit taking, while automobile stocks gained.
"Most stocks that stand to gain from GST have already rallied, anticipating its passage. It's a good step for the long term," said Andrew Holland, chief executive officer, Ambit Investment Advisors. Foreign investors continued their buying spree. On Thursday, they bought a net Rs 560 crore of shares. Domestic institutions, on the other hand, sold a similar amount. Foreign institutional investors have been net buyers for 20 trading sessions, pumping Rs 13,500 crore ($2 billion) in this period.
The GST amendment has to be passed by the Lok Sabha, where the Narendra Modi government has a clear majority. Also, it needs to be ratified by at least half of all state governments. Tata Steel and Tata Motors were among the best-performing stocks in the Sensex, each gaining a little over four per cent. Bharti Airtel and Adani Ports, adding two per cent each, were other major gainers. Asian Paints, Lupin and Infosys each fell a little over one per cent, the highest among Sensex components.
Shares of logistics companies, including Gati and Snowman Logistics, fell sharply.
Shares of these companies have risen sharply in recent months.
"It will be some time before we know the rates for various industries and companies and, so, it's early to take a sector call," Sampath Reddy, chief investment officer at Bajaj Allianz.
