Investors beware: Stock markets are not prepared for GST disruption

With the July 1 Goods and Services Tax (GST) roll-out in place, a critical area from the government’s perspective is the readiness of the Goods and Services Tax Network as compliance to the new regime is entirely dependent on the efficacy of the service providers. The government has to ensure that smaller businesses in Tier-2 and -3 cities are ready as this community is, by and large, clueless, while at the same time, their awareness is critical for GST's success. The organised sector will have to get their processes and information technology (IT) systems aligned. Also, we have a huge unorganised sector, which recently got rattled by demonetisation, which is now expected to embrace the GST system. Compliance under GST will be burdensome and the outcome would be binary. Either you are compliant or you are not since there cannot be any intervening period that is termed as a "migration period". Nifty Trading Tips

Every manufacturing process would finally boil down to a GST chain with various entities or individuals playing out their part. As the adage goes, "The chain is as strong as it’s weakest link." And there could be a number of weak links, especially among the small & medium scale units that supply various critical components across manufacturing chains. This could cause physical disruption in the manufacturing process. We could, in fact, witness disruption even before the July 1 roll-out date, as various establishments move to clear their inventory at steep discounts and manufacturing is stopped to avoid building up inventory. This will lead to a jump in sales at the cost of margins in the month of June, while a slackening in demand will follow in the ensuing months. Future & Option Trading Tips