The upper house unanimously approved a nationwide Goods and Services Tax (GST) yesterday. It was a historic moment after more than a decade when it was first proposed. It sends a strong signal of the government’s pragmatism and fortitude to press ahead with much-needed reforms.

It will simplify a cumbersome tax code, reduce corruption, curb tax evasion, increase tax revenue, and a positive step to improve the ease of doing business in India. The GST approval is only the beginning as the task of implementation will be long and arduous.

The bill will return to the Lower House and then at least half of the 29 states will need to approve it which could be completed by year-end. Even then, implementation by April-2017 may still be difficult and H2 2017 seems to be a more realistic timeframe. An earlier report commissioned by the Thirteenth Finance Commission estimated that GST could boost GDP by 0.9-1.7%.

Most would acknowledge that the economic benefits will largely depend on an efficient implementation and the details which are still to be decided e.g. the GST rate and structure and revenue sharing with the states.

FIIs Take Bearish Positions in Index Options, FIIs buy 25 index puts for every 1 index call

Foreign institutional investors (FIIs) took bearish positions in the options market on net basis. Participant-wise, open interest data on NSE indicated that over 25,000 index put contracts had been bought by FIIs for every 983 index call contracts on Wednesday.

A glimpse on FX Risk mitigation:

For USDINR, stay short in mid-futures as the pair could head back to the lower end of the 66.00-667.50 range near term particularly if equity inflows remain strong on renewed optimism over reforms.

USDINR prices failed to fall below the recent lows and rebound from the support level to end with bullish candle.  This is indicating for pattern failure, however, confirmation of the same will come only on the cross of 67.49.

GBPINR: The pair opened the past session with a positive gap and concluded the same with a bullish candle. This has confirmed the bullish breakout in the pattern and now we expect that prices can travel up to 90.30 and 91.50 levels. Use ATM calls to hedge this upside risk on higher IVs.

EURINR: The pair maintaining its bullish stance ended the past session around the rising resistance line which is at 75.60. Surpass of the same can take the prices to higher levels of 76.  Daily MACD is sustaining well above the signal line and is supporting the bullish outlook.