By Ravi Dutta Mishra
Mumbai, Sep 20 (IANS) Indian markets responded most positively on Friday to the corporate tax cut announced by government, more than it has done recently to measures announced by Finance Minister Nirmala Sitharaman in the past few weeks to revive the economy.
The benchmark Sensex gained over 1,921 points on Friday in what was the biggest ever single-day jump in over 10 years. The Nifty followed suit as the governemtn finally made up for a depressing budget in July that cost millions of crucial FPI money in outflows.
On the corporate tax cut announced, experts said that market gains by the benchmark would certainly not be limited to 5-7 per cent . According to them, the “animal spirits” could be back and investors who had waited out the rough two months post-Budget would be rewarded.
Amit Gupta of TradingBells said the Indian markets now are in line with its Asian peers like China and Indonesia in terms of corporate tax rates and are “surely going to catch the eyes of many FPIs and FIIs, and we can see the inflows surging in the coming week”.
Gupta advised investors to focus on various corporates which are currently paying over 25 per cent taxes such as State Bank of India, United Spirits, Tata Steel, ONGC, Mahindra & Mahindra, among others.
“These and many other scrips registered gains of 4 per cent to 10 per cent in trade today (Friday) and could see further upside as the benefit of lower taxation materialises in time to come, ” he added.
Vinod Nair, Head of Research, Geojit Financial Services said: “The new corporate tax reforms by the government is music to the investors’ ears and will help to revive economic outlook in the coming quarters.”
Nair also said that “FIIs now have a good reason to come back to India and this progressive step will stimulate consumption and ignite the capex cycle. Additionally, companies will get more elbow room to pass on benefits to customers, which in-turn will improve earnings visibility.”
(Ravi Dutta Mishra can be contacted at email@example.com)