Indian equity markets, which have rallied since Finance Minister Nirmala Sitharaman announced corporate tax cuts last week, will scale new highs before the bi-monthly monetary policy due in October.
That’s according to Andrew Holland, chief executive officer of Avendus Capital Public Markets Alternate Strategies LLP, who is now seeing a momentum in the markets. “We are not near the highs yet, but we will quickly get there,”.
The NSE Nifty 50 Index has gained 8.6 percent in three trading days since the Narendra Modi government announced a Rs 1.45-lakh-crore stimulus in the form of corporate tax rate cuts. The Nifty and Sensex benchmark indices had surged to record highs in early June, after Modi’s Bharatiya Janata Party returned to power with a larger majority.
The market is expecting more positive news on personal income tax and capital gains tax fronts, Holland said, adding that any of those could be the extra fillip needed. “Markets will try to hit new highs within the next couple of weeks.”
On a long-term perspective, Holland expects the market rally to line up with earnings growth for Corporate India.
“The kind of earnings we would expect from next year, which is FY20-21, is in the range of 10-15 percent at this point because we still have to see this play through into final demand which we think would happen in the next quarter.”
