Indian Stocks Jump for Second Day on Corporate Tax Cut Boost
Comment of the Day

September 23 2019

Commentary by Eoin Treacy

Indian Stocks Jump for Second Day on Corporate Tax Cut Boost

This article by Abhishek Vishnoi for Bloomberg may be of interest to subscribers. Here is a section:

Indian stocks rose for a second day on expectations that the government’s surprise $20 billion company tax cut will revive economic growth and boost company earnings. The S&P BSE Sensex jumped 2.8% to 39,909.03 at the 3:30 p.m. close in Mumbai, while the NSE Nifty 50 Index advanced 2.9%. Both gauges surged 5.3% on Friday, marking their biggest gain since May 2009, after the corporate tax rate was lowered to 22% from 30%.

Analysts increased earnings estimates for both measures by as much as 10% to factor in the lower tax burden. The government’s move follows a series of other measures unveiled over the past month aimed at boosting consumer demand and attracting investment.

Eoin Treacy's view

Investors buy stocks rather than countries and a significant cut to corporate taxes is likely to provide the same boost to Indian shares as it did for US shares. The move brings India’s corporate tax rate into line with the Asian average rate and represents a clear fiscal stimulus for the wider economy.

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