InvestNow News 23rd Sep – India Avenue – An About Turn On Sentiment
THE GOVERNMENT CUTS CORPORATE TAXES
The Government of India cut corporate taxes from 30% (34.3% including surcharge and cess) to 22% (25.2% all inclusive) on Friday 20th of September 2019. This was announced during market hours and saw one of the strongest rallies ever posted, with the Nifty 50 rising 5.3% by the end of the day.
The estimated US$20bn impact should boost sentiment in Corporate India which apart from a one-time increase in profitability, should also lead to a turn in consumption and a boost for investment / manufacturing.
This reflects a shift in the Government’s thinking from fiscal discipline to towards a pro- growth culture. Monetary policy has been cut by 11bp over the past year and now this fiscal reform, along with a good monsoon, should be positive for stock market sentiment.