Year-end targets for Sensex and Nifty raised by 11%. Analysts estimate 10% rise in India Inc.’s earnings. No revision in fiscal deficit target or spending cuts on the horizon, says FM. Thomas Cook goes bankrupt, leaves hundreds of thousands travellers stranded. NYSE owner launches Bitcoin futures contracts.
Table of Contents
To the Best of your Abilities: Sensex rallied 3,200 pts and Nifty soared 5% in the last 2 days following the corporate tax rate cut announcement by the government on Friday. This has prompted analysts to raise year-end targets for Sensex and Nifty by 11%, and these targets, in fact, look quite achievable.
In the last seven years, there have been six instances when Nifty has seen an intra-week rebound of 5% or more, and every such instance was followed by a 3-13% jump in the three months that followed, barring one instance, when it rose 11-25% in the year that followed. ET Markets
Betting Hard: The corporate tax rate cut has resulted in a 10% rise India Inc.’s earnings estimates. As per analysts, the government’s move may improve earnings, margins and help initiate capacity expansion before a potential improvement in consumer demand ahead of the festive season next month. BS
Glass Half Empty: However, this may not be enough to kickstart the slowing Indian economy. The slowdown has partly been because of Indians have either stopped buying or postponed their purchases of goods, and the corporate tax rate cut doesn’t do much on this front. Livemint
What You Need to Know: The Finance Minister Nirmala Sitharaman in a bid to boost the slowing Indian economy on Friday announced a cut in corporate tax rate to 25.17%, inclusive of all cess and surcharges for domestic companies. For companies that do not avail any tax incentive, the rate has been cut to 22%.
Two-Sides of the Coin: Now while the equity markets soared on back of the move, bond yields spiked to a near three-month high on rumors the government may have to borrow more to meet its spending needs as the announcement is likely to result in loss of revenue for the government to the tune of INR1.45L cr annually.
But brushing off all qualms, Sitharaman said the government would only review the fiscal deficit target closer to the 2020/21 budget. She also said that the government would decide on additional market borrowings for the second half of 2019/20 later. Reuters
Mounting Worries: In a recent directive, RBI has asked commercial banks and NBFCs to stop sharing customers’ credit data held by credit bureaus with unregulated entities. The move is likely to prove detrimental to emerging fintech startups and software service providers who directly work with banks to evaluate credit quality. ET Tech
The Coup: Reports have emerged that some members of WeWork’s seven-member board and large investors are privately discussing whether and how to pressure the company’s co-founder and CEO Adam Neumann to step down and become a non-executive chairman. TechCrunch
This comes as the co-working space company’s attempts at a public listing flounder consistently as its valuation plummets. Investors are reportedly reluctant to pump capital into WeWork unless Neumann steps down and an experienced operator was brought in. NYT
The biggest impetus behind this desire to replace Neumann is apparently from SoftBank, which is WeWork’s biggest investor. The Japanese conglomerate is obviously eager to not have a repeat of Uber’s IPO fiasco (the ride-hailing firm suffers to even stay around its IPO price).
London’s Cook is Falling Down: London-based tour operator Thomas Cook has collapsed. Months of sky-rocketing debt and inability to repay banks have led to the company entering liquidation and all of its companies ceasing trading. The company was popular for offering low-cost package holidays to more than 60 destinations worldwide, boasting of 19mn customers and 21,000 employees as of last year. CNN
The group’s four airlines will be grounded and its thousands of employees around the world are at risk of becoming unemployed. Meanwhile, 600,000 travelers are scattered around the world, clueless about what happens next. The UK government has announced what could be its largest peacetime repatriation effort to arrange the return of c. 150,000 of its citizens. CBS News
Trading on an Exchange: The first Bitcoin Futures trade launched by International Exchange, the owner of New York Stock Exchange, was executed late Sunday. The move was aimed at enticing investors towards cryptocurrencies and making cryptos viable for all kinds of investors. The trade was met with lukewarm market reaction, with Bitcoin rising by only 0.5% to c. $9950.
This isn’t the first time Bitcoin futures have been launched. And previous attempts – by Cboe Global Markets and LedgerX – either floundered or faced opposition from regulators. CNBC
Last Man Standing: India is not friendly towards cryptocurrencies. The RBI and the government have viewed digital currencies suspiciously and official panels have recommended banning them altogether. Amidst this hostile environment is Nischal Shetty, founder of WazirX , one of the last remaining crypto exchanges in India. He recently sat down for an interview with CryptoSlate on his company’s journey, its battles with regulators, and the crypto scene in the country. CryptoSlate
(Don't want to miss out on these End Of Day Wrap Ups? Subscribe Now to our WhatsApp Feed and get the day's Top Business stories straight on your favourite messaging app.)