Markets rise on hopes of more govt reforms
MUMBAI: Indian stocks gained on Thursday, riding on hopes the government will follow up last week’s corporate tax cuts with more tax reforms. The benchmark BSE Sensex rose 396.22 points or 1.03%, to 38,989.74, while the 50-share Nifty gained 1.15% to 11,571.20 points.
With top executives of some of the world’s biggest companies in attendance, Prime Minister Narendra Modi said at the Bloomberg Global Business Forum in New York that India will not shy away from taking the “toughest decisions”.
He promised to further simplify India’s tax regime, including bringing tax on equity investments in line with global standards, making a strong pitch to global business leaders to invest in India.
Analysts said the next set of reforms may be abolition of longterm capital gains tax (LTCG) and dividend distribution tax (DDT).
Vinod Nair, head of research at Geojit Financial Services Ltd attributed Wednesday’s worldwide selling to the political drama in the US, something which was reversed today.
“While Indian markets recovered from profit booking from the sharp gain, momentum was broad-based with auto, banks and metals leading the gains on expectation of better demand during festive season. This positive trend is likely to be maintained in combination with ease in trade war and domestic stimulus,” he added.
Following several growth-supportive measures undertaken recently, finance minister Nirmala Sitharaman announced steep corporate tax cuts on Friday to revive growth and investment, driving the Sensex up 8% since then. Foreign brokerages have upgraded their targets for benchmark indices, stating the measures have significant positive implications for corporate profitability, broader economy and market valuations.
However, analysts at UBS said the measures may not boost nearterm growth but think this may be a major reform to realizing medium-term growth, or even prevent stagnating lower growth.