GST implementation is around the corner.
We spoke to a few equity fund managers to understand the impact of uniform tax structure in your client’s portfolio.
Mahesh Patil, Co-CIO (Equity), Birla Sun Life MF
I do not think there will be any major impact of GST on equity markets. However, many market participants expected lower rate of taxation under GST but it did not happen.
In my view, GST rates are neither high nor low. Markets have already factored in these changes.
On portfolio, we continue to be bullish on sectors like consumer discretionary, private banks, cement and media. In fact, consumer discretionary would gain traction in future due to under-penetration and good monsoon prospects. Long-term growth for the sector looks good.
Currently, we are underweight on telecom and IT sector due to fierce competition and uncertainty in global markets.
Harsha Upadhyaya, CIO – Equity, Kotak Mahindra Mutual Fund
Post GST, unorganised businesses would fall under tax net. So far, these businesses avoided paying taxes and took benefits of pricing arbitrage. These businesses usually operate in small cities and rural markets giving tough competition to organised businesses having similar products. All these benefits for unorganised businesses would go away making organised businesses attractive for investors.
Taher Badshah, CIO (Equities), Invesco Mutual Fund
Barring FMCG, most of the sectors will have tax rates as anticipated.
I do not think GST would have a big impact on markets for the short term. However, if implemented efficiently, it would benefit the markets in the long term.
GST would have some impact on FMCG, as rural demand would pick up due to prospects of good monsoon.
Jinesh Gopani, Head of Equities, Axis Mutual Fund
The government has exempted most of the essential goods from paying GST. In addition, the government has rationalized rates of most of the FMCG products from 28% to 18%. In future, FMCG companies would pass on the benefits of low tax rates to their customers. GST would help FMCG sector grow by an additional 2%.
For the last seven months, we have been overweight on FMCG and will continue to remain so in the coming days.
Atul Bhole, Equity Fund Manager, DSP BlackRock Mutual Fund
GST would help curb black money. It would shift the demand of goods from unorganised to organised sector. Though rates are higher in some categories, there will be a gradual shift in demand for the goods of organised sector.
Currently, we are bullish on FMCG, consumer discretionary, banking, oil marketing and gas distribution. In addition, the retail-focused private banks are growing very fast and there are expectations that it will continue to grow faster.
We continue to remain underweight on IT and pharmaceutical sector. However, GST would not affect these companies, as they are export driven businesses.
