(Bloomberg) -- 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 company earnings.
The S&P BSE Sensex climbed 1% to 38,989.74 at the 3:30 p.m. close in Mumbai, while the NSE Nifty 50 Index gained 1.2%. Both gauges surged more than 7% in the four sessions through Wednesday after India's government cut 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 may be limited at the index level but “there seem to be a lot more gains in adding risk to your portfolio at the stock and sector levels,” the note added.
The Numbers
- Seventeen of the 19 sector sub-indexes compiled by BSE Ltd. advanced, led by a gauge of metal companies.
- 24 of the 31 Sensex members and 41 of the 50 Nifty companies rose.
- Vedanta Ltd. was among the top gainer on the benchmark, while Yes Bank Ltd. slumped the most.
Analyst Note/Market-Related Stories
- Crisis at Regional India Lender May Become Boon for Large Banks
- India's Animal Spirits Hushed as Consumer Demand Remains Elusive
- Modi Tells Investors ‘Come to India' to Aid $5 Trillion GDP Goal
- Modi Rues India's Omission From Nuclear Group in China Swipe
To contact the reporter on this story: Abhishek Vishnoi in Singapore at avishnoi4@bloomberg.net
To contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Margo Towie, Tim Smith
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