Bears slaughtered en masse to pave way for ‘Howdy Modi‘ jamboree
Initially, Nirmala Sitharaman (fondly known as ‘Sita Mata‘ by the novices of Dalal Street), tried to scare the Bears by introducing petty reforms like banning e-cigarettes etc.
However, these were too frivolous to scare the battle-hardened Bears.
They refused to budge and instead mocked her by likening her press conferences to ‘Kumkum Bhagya‘, a TV serial popular with bored housewives.
Aaj me Kumkum Bhagya jarur dekhunga..??
— Mitesh Patel (@Mitesh_Engr) September 20, 2019
Ultimately, on the eve of NAMO’s ‘Howdy Modi‘ jamboree in the USA (which President Trump will also attend), Sitharaman realized that she is running out of time and has no choice.
She came personally to Dalal Street and unleashed the ‘Brahmasthra‘.
The weapon cost a massive fortune of Rs. 1.74 lakh crore.
However, it did the job in an efficient manner.
The Bears had nowhere to run or hide.
They were slaughtered en masse and their reign of terror on Dalal Street ended finally and in a decisive manner.
Smt @nsitharaman announces major relief in corporate tax for domestic companies, in order to boost the Make in India initiative. pic.twitter.com/F1WvbEAmt8
— NSitharamanOffice (@nsitharamanoffc) September 20, 2019
NAMO described the reforms as historical and claimed that it will attract private investment from across the globe, improve competitiveness of our private sector, create more jobs and result in a win-win for 130 crore Indians.
The step to cut corporate tax is historic. It will give a great stimulus to #MakeInIndia, attract private investment from across the globe, improve competitiveness of our private sector, create more jobs and result in a win-win for 130 crore Indians. https://t.co/4yNwqyzImE
— Narendra Modi (@narendramodi) September 20, 2019
Eminent Billionaires and captains of Industry also welcomed the move.
Reducing corporate tax rate to 25% is big bang reform. Allows Indian companies to compete with lower tax jurisdictions like the U.S. It signals that our government is committed to economic growth and supports legitimate tax abiding companies.A bold, progressive step forward.
— Uday Kotak (@udaykotak) September 20, 2019
Woke up in the U.S to this news. The best way to start the day. Not only because companies will pay less tax.But because this isn’t just another policy tweak. @nsitharaman fired a shot that will be heard around the world. India has sent an invitation letter to global investors. https://t.co/0zx8efGNha
— anand mahindra (@anandmahindra) September 20, 2019
However, the ‘Brahmasthra‘ took rival politicians like RaGa and other junkyards by surprise.
They were at a loss for words and mumbled incoherently.
Rahul Gandhi clearly does not understand that when the market goes up it helps millions of small investors not just rich businessmen. And, that the value of banks, public sector companies also goes up. This is the people’s money. https://t.co/INN8HWZrQC
— Tavleen Singh (@tavleen_singh) September 20, 2019
Bhai let it be. Its Economy. Not your cup of tea. Not a single communist economy is alive.
— S S BHATIA (@ssbsons) September 20, 2019
Sep 19: Sensex falls 500 points. OH MY GOD. Rs 2.45 lac crores of investors' wealth erased. END OF THE BLOODY WORLD. India DOOMED. JESUS. This is the END, my friend. Gone. KAPUT.
Sep 20: Sensex rises 1600 points. Rs 7.84 lac crores of investors' wealth ADDED. *Crickets*
— Anand Ranganathan (@ARanganathan72) September 20, 2019
All of us who saw what happened today in markets will be telling this to their kids years from now….how India changed @sensexbaba
— Darshan Mehta (@darshanvmehta1) September 20, 2019
Bulls storm in, Stock markets surge to biggest 1-day gain in 10 years
The Bulls, who were tormented by the Bears over the past 24 months, stormed the gates of Dalal Street and took charge, mercilessly slaughtering the few remaining Bears who were running for their lives.
In the melee, the Sensex surged a colossal 2000 points, breaking the World record for biggest 1-day gain in 10 years.
WHAT A DAY THIS IS TURNING OUT TO BE
Biggest 1-day Gain For Nifty in 10 Years
Biggest 1-day Gain For Sensex in 10 Years
Biggest Ever 1-day Gain For Nifty Bank
Biggest 1-day Gain In 20 Yrs
Biggest Single-day In 10 Years@CNBCTV18Live @nsitharaman#Friday
— Mangalam Maloo (@blitzkreigm) September 20, 2019
Best stocks to buy – FMCG stocks are beneficiaries of rate cut
It is elementary that the reduction in the tax rates will benefit those stocks which are paying high rates of tax.
According to Mangalam Maloo of CNBC TV18, blue-chip MNC stocks like Nestle, ITC, Asian Paints, Colgate, HUL and GSK Consumer are big beneficiaries because they pay tax at rates of up to 35%.
In contrast, companies like Godrej Consumer, Dabur and Emami stay unaffected because they already pay tax at rates ranging from 19-22%.
“The most important benefit from an investment perspective is, while tax cuts across the board are a big positive, FMCG may be first among equals. The high PE Multiple that FMCG sector trades at would imply a higher change in stock price, given incremental growth in EPS. For Example, improvement of EPS by Rs 1 for 20X PE Stock would mean Rs. 20 increase in Stock Price while the same would be higher by Rs. 45 for a stock trading at higher valuations, assuming everything else remains constant,” it is opined.
FM @nsitharaman; @nsitharamanoffc Announces Tax Cut to 25.17%
Current Effective Tax Rate
GSK Cons 35%
Asian Paints 33%
— Mangalam Maloo (@blitzkreigm) September 20, 2019
FM ANNOUNCES BUDGET
Tax Cut Impact on FMCG Cos
Positive for Nestle (34%), ITC (32%), Asian Paints (33%), Colgate (32%) & HUL (29%), GSK Cons (35%).
No Change For Godrej Cons, Dabur & Emami (pay b/w 19-22% tax currently)#FMCGisLife
— Mangalam Maloo (@blitzkreigm) September 20, 2019
Sonal Bhutra, the CA, pointed out that even PSU giants will benefit from the tax rate cut.
Current Effective Rate
Oil India: 40%
Reliance: 27.9% https://t.co/MH4YmSyGnT
— Sonal Bhutra (@sonalbhutra) September 20, 2019
Take a look at the companies that have a tax rate of more than 25%#NirmalaSitharaman #TaxRateCut#Sensex #Nifty pic.twitter.com/fwn6SaYH03
— CNBC-TV18 (@CNBCTV18Live) September 20, 2019
Buy-back stocks will also benefit
Another obvious beneficiary of the reforms will be companies which have announced buy-backs before 5th of July 2019.
Such companies are exempted from the dreaded buy-back tax.
A list of companies which announced buybacks before July 5 but have not proceeded yet is available here.
The Buy Back news in which taxes will be exempt from Dates before July 2019 could benefit companies like
– Sasken Communication (April)
– Welspun Enterprises (May)
— Yatin Mota (@YatinMota) September 20, 2019
Pharma stocks will also prosper
Exta Batra, the expert on the Pharma sector, has opined that all Pharma companies will benefit, especially those with 100% domestic focus.
All #pharma cos to benefit especially those with 100% #domestic focus;@ekta_batra with a heads-up on the pharmaceutical space post announcements pic.twitter.com/DIgzZMDZHu
— CNBC-TV18 News (@CNBCTV18News) September 20, 2019
You missed 1991 and 1997. Don’t miss 2019
The pundits of Dalal Street are understandably in high spirits.
Basant Maheshwari reminded novices that this is not the time to sit on the fence and pontificate.
Instead, we have to dive in head first and go all out.
I was too young to understand 1991; too stupid to capitalise on 1997; this one will just not let it go ! @nsitharaman @narendramodi
— Basant Maheshwari (@BMTheEquityDesk) September 21, 2019
“This is early and timely Diwali. This is not bigger than budget, this is bigger than 20 budgets,” Samir Arora gushed, delirious with joy.
This is not bigger than budget, this is bigger than last 20 budgets.???
— Samir Arora (@Iamsamirarora) September 20, 2019
Porinju Veliyath claimed that the “Animal Spirits” have been unleashed and that there is now no looking back for the Bulls.
He called it the “beginning of the Great Indian Dream“.
All set to Make in India! Thank you @PMOIndia and @nsitharaman for listening to stakeholders and unleashing the Animal Spirits. This restart marks the beginning of the Great Indian Dream!
PS: Dil mange more on Land, Labour, Logistics, Personal Income Tax (42.7% too much) et al.
— Porinju Veliyath (@porinju) September 20, 2019
Vijay Kedia equated Sitharaman’s reforms with the historic 1991 reforms of PV Narasimha Rao and Manmohan Singh, which led to the Mother of all Bull Markets.
It really reminds me of 91 reforms.
Hopefully More to come. ? https://t.co/T8BSH7jPnK
— Vijay Kedia (@VijayKedia1) September 20, 2019
However, Shankar Sharma, who has a rabidly anti-NAMO stance, was not much impressed.
He described the Country as “Bananaistan” in a contemptuous manner and downplayed the reforms.
The one thing I've noticed since the 90s in Bananaistan: do something for the poor(eg, any upliftment scheme, midday meal)stock market crashes, experts wail "populism/socialism". Spend the same on benefitting the haves, market shoots up, experts hail"Gamechanging/Progressive".
— Shankar Sharma (@1shankarsharma) September 21, 2019
*FM Chidambaram reduced corporate taxes in 1997 by 5%
*In the following 4 sessions Nifty rallied 13.4%
Indian Markets are roaring today in reaction to FM @nsitharaman @nsitharamanoffc tax rate cuts
Is a bigger rally in the offing??#Nifty #nifty50 #FinanceMinister
— Nigel D'Souza (@Nigel__DSouza) September 20, 2019
A lot of people missed yesterday's rally because they sold a lot early due to massive fear. Few imp lessons "Stay invested in good cos for long time. Time in the market is more imp than timing the market. Have faith in India, do your proper research & give it time"
— Varinder Bansal ?? (@varinder_bansal) September 21, 2019
Shankar Sharma is absolutely right! NYAY scheme would have been a better reform than these tax cuts.Very hard to get balanced view or sane voice like Shankar Sharma these days. NYAY would be a game changing move and a great transformation!
where is kharab?? keep on shouting on modi… Now i hope your brain will start work…..
It is too early to celebrate. Slowdown is still there and economy is in bad shape. Better wait for quarter to see improvement in results before buying stocks.
Alternative is to buy small amounts, 25% of total portfolio now and stagger buying balance for later.
Looked to me as if half the gains on Friday came from short covering. Many shorted at around 1000 levels and caught off guard. I am not really sure friday’s announcement is bigger than Modi’s landslide victory first and second time and calls for a rally of a decade on a single day.
Dangerous rally of more than 2000 points in a single day with tax cut announcement conveyed in a head line grabbing manner. Remember the tax cut has been from 30% + surcharges & cess to 25% + surcharges & cess with no exemption and deduction claimed/allowed.
See the fine print and then celebrate.
Announcement on MAT is welcome and so is on new companies w.e.f. 01.10.2019.
Effective tax rate is 25.17% (22%+surcharge+cess all including)
around 10% less than current one
Yes, it is 22% against 30% earlier with applicable surcharge and cess.
Mega bull run has started in sensex. It may cross 45k by December on this massive reform.