Singapore: India’s equities benchmark rose, tracking most regional peers higher, on an easing in trade tensions and as investors assessed the potential of a lower domestic corporate tax rate to boost to company earnings.
The S&P BSE Sensex climbed 0.9% to 38,949.71 as of 9:52 a.m. in Mumbai, while the NSE Nifty 50 Index gained 1%. Both gauges surged more than 7% in the four sessions through Wednesday after India’s government lowered the corporate tax rate to one of the lowest in Asia.
Still, India remains the most expensive market in emerging Asia even as analysts increased earnings estimates for the benchmark gauges by as much as 10% to factor in the lower tax burden, according to Bloomberg data. The $4.61 billion of local stocks foreign investors have sold this quarter through Sept. 24 would be the biggest quarterly outflow since 1999, according to data compiled by Bloomberg.
Strategist View
“The structural corporate tax rate cut seems to have reset India up—on risk appetite, longer-term growth expectations and earnings,” Edelweiss Financial Services Ltd.’s analysts including Aditya Narain wrote in note Wednesday. The potential for gains may be limited at the index level but “there seem to be lot more gains in adding risk to your portfolio at the stock and sector levels,” the note added.
The Numbers
- All of the 19 sector sub-indexes compiled by BSE Ltd. advanced, led by a gauge of oil and gas companies.
- 27 of the 31 Sensex members and 44 of the 50 Nifty companies rose.
ICICI Bank Ltd. was among the top gainer on the benchmark, while Yes Bank Ltd. slumped as much as 5.3%, to its lowest since Sept. 2013.
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