Hopes on GST may push stock market higher

Renewed hopes that the Goods and Services Tax (GST) law will be cleared in the ongoing Parliament session could push the stock market higher early this week. Traders may cover their short positions early in the week as the passage of GST is considered the most crucial economic bill by the market. RBI is unlikely to cut rates on Tuesday but investors will watch the central bank’s commentary on future rate cuts and inflation. Brokers said, however, gains would be capped due to foreign institutional investor (FII) selling. “There is hope that GST could be passed in the current winter session. This could boost sentiment in coming days” said Kamlesh Rao, CEO, Kotak Securities.

“But, continued selling by FIIs is a concern”.

So far in November, FIIs have pulled Rs 5,300 crore out of Indian stocks, though flows from domestic institutions have softened the impact of the selling. FIIs, which were sellers in August and September, renewed selling in November after a break in October amid worries that the US Federal Reserve may start raising rates in December.

Banking stocks could be in focus ahead of the RBI Policy.