Uncertainty over GST can have serious ground implication: Expert

The action by the US Fed was expected and the word coming from them suggests a more dovish stance, says Nilesh Shah of Envision Capital.

"The good news is that they have laid out a roadmap for the next three years," he added.

In an interview with CNBC-TV18 he said that demonetisation as an event maybe over but its impact on quarterly earnings is yet to be seen.

On the macroeconomic front he further said that uncertainty around the roll out of the goods and services tax (GST) bill has certain serious ground implications.Below is the verbatim transcript of Nilesh Shah’s interview to Anuj Singhal, Latha Venkatesh & Sonia Shenoy on CNBC-TV18. Anuj: The market reaction is quite enthusing for the bulls because we are now in the green for most indices do you think the worst is truly over and this big event is now out of the way. A: That seems to be the case; I think the action by the US Fed was by and large anticipated, expected and if you really look at the talk by the US Fed, I think in a way from a growth stand point it is reasonably dovish, if you really say. I mean of course they are talking about what kind of rate hikes that they could do, but the good news is that at least they have laid out the road map saying that over the next three years the aspiration is to get to kind of the normal interest rate, the economy is doing a lot of better, job creation is happening, unemployment rate is falling. So, these are all really the good noises. So, to that extent I think by and large whatever policy action which the US Fed was expected to take and what they could likely do over the medium-term I think by and large is now reasonably well known in the market place and therefore to that extent it is in a way a relief for the market. Latha: To get to one more macro question to you has the demonetisation theme played out or will we see some more headwinds when the results start coming out and as Udayan Mukherjee was saying even when the April results come out? A: I think the event is done with, I think we are done with demonetisation, but I think the impact in terms of corporate numbers, growth, earnings I think we are yet to see that. We have seen some initials signs where some of the companies have come up and said November has not been a great month. Some of them have had flat numbers, some of them have had de-growth, I think that is something which will play out and probably play out for an extended period of time. I don’t think it is something which will get over with just the December quarter; it could very well go on to the March quarter. One more I think a headwind which we could encounter is that goods and services tax (GST), the uncertainty around GST has certain serious ground implications because when you really don’t know when GST will rollout it is quite possible that the business and the trade will be very cagey and cautious about holding on to inventory and stock. So, it could just kind of become a just in time concept, we are saying okay you basically stock as much as you can sell the next day. I think business trade is going to be very cagey about holding on stocks. If you really look at a lot of companies they tend to kind of push inventory and products to the dealer channels that is something which and therefore they could basically report growth also that was one of the contributors. I think if there is no clarity on when exactly GST will play out then my sense is that even the March quarter, the uncertainty could continue even for the March quarter and may be even beyond that. So, that is one more headwind which I think will crop up even beyond demonetisation.