• GST implementation and Insurance bill, key to reform process: For long we have different tax regime in different states and the issue of implementing a uniform tax regime( Goods and Service Tax or GST) has been on the sidelines as there was no consensus among the states. It is expected that once the GST is implemented, it will lead to the abolition of other taxes such as Octroi, Central Sales Tax, State-level Sales Tax, Entry Tax, Stamp Duty, Telecom License Fees, Turnover Tax, Tax on Consumption or Sale of Electricity, Taxes on Transportation of Goods and Services, etc., thus avoiding multiple layers of taxation that currently exist in India. Increase in FDI in the insurance sector to 49% is keenly awaited, as a part of the pushing through the economic reforms.
• Remain Overweight Financials and Automobiles : Lower crude and commodity prices have ensured a low inflation level for India in the near term and we believe that this will lead to an increase in consumption. We continue to remain overweight in financials and automobiles, the beneficiaries of the consumption demand as they will continue to benefit from the low inflation environment. Given this scenario, we remain with overweight position in the Financials and Automobiles while maintaining Neutral in IT, FMCG and Capital Goods. We remain underweight in Pharma.
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