Released today under my authorship in the SCRIP STANDPOINT Module of Jeena Scriptech Alpha Advisors Pvt Ltd
“How’s the Josh !?”
Boom!as FM Busts Corporate Tax!~Wow!How!Now!?
The effect of Fun & Excitement peaks when the cause is least expected
Market Sentiment has reversed dramatically & instantaneously !
BSE & NSE has seen the Sensex & Nifty created historic surges moving respectively 5.32% & 1921 points up to 38015 & 569 points to 11274 on Friday,September 20,2019 & even more by 2.83% to 39090 & 11600 on Monday ,September 23,2019 to aggregate a surge of 8.3% in just two trading days with Total Market Capitalisation zooming up in just these two trading days by Rs 10,45,700 crs or nearly US $ 150 Billion to Rs 148,87,830 crs or near US $ 2.1 Trillion ,thus regaining US $ 2 Trillion Capitalisation quickly !
||Up/(Down) Points, %
||Approx Total Market Cap
|Total Market Cap Up (Down )
Rs Crs, %
|Friday ,September 13,2019
A Week Before
Day before Tax Rate Game Changing Significant Slash Announcement
||(1292), – 3.46
Morning of FM’s Tax Rate Game Changing Significant Slash Announcement
||1922, 5.32 %
On Second Trading Day after FM’s Tax Rate Game Changing Significant Slash Announcement
||1075, 2.83 %
2997 in two days, 8.3%
Wow ! How ! Now ! ?
It took a Government Sacrifice of Rs 1,45,000 crs or US $ 20 Billion in Corporate Tax Revenues to create a 7x sacrifice surge in Market Cap of US $ 150 Billion in just two trading days !
It’s like the Government conceding to the Corporate Sector ” Hey Guys ! we’re transferring our Revenues to you as you’ll can put it to more productive use by funding an Investment Capex Cycle to stimulate more growth for better returns than we can through increased Government Spending “
What is clearly a Market Valuation Re-Rating Move,on the morning of Friday,September 19,2019 our FM Mrs Nirmala Sitharaman announced,what should be seen as a forced measure, a Tax Bonanza for Corporates busting the Tax Rate from an effective high of 34.94% for most to an effective 25.168% with no requirement for those who opt for this rate, to pay the Minimum Alternate Tax which too was slashed to an effective 17% from the current 18.5%.Another major tax incentive will be a Tax rate of just 15% for manufacturing companies incorporated after October 1,2019 & who commence manufacturing by March end 2023
Such Tax Rate Cuts & Incentives announcements should have been part of the budget in early July.If one recalls since the NDA came to power in 2014,it’s always been their stated intent to reduce the Corporate Tax Rates gradually to 25%.Economic slowdown is a catalyst to this ‘one shot’ reduction now & that’s why it can be viewed as a forced measure
It’s a ‘No Brainer’ that Markets would instantly turn euphoric as back of envelopes calculations see the Nifty 50 Companies,whose aggregate FY 19 PAT was Rs 370000 crs , benefit by a clean Rs 27000 crs or US $ 3.8 billion in FY 20 on this Tax Rate reduction.Factor in Earnings Growth before Tax & the benefit is even higher