Amid the euphoria sparked off by Finance Minister Nirmala Sitharaman's corporate tax cuts, some traders have refused to cut their bearish bets. They remain short on auto, realty and PSU banks as they don't agree the tax cut would benefit all. Economists are not convinced about the fiscal maths; some project fiscal deficit to hit 3.7 per cent of GDP against the 3.3% target. It's only a matter of time before reality dawns!
STREET PULSE: Where we stand Asian stocks traded mixed while US stock futures gained in early trade after US Treasury Secretary Steven Mnuchin said US-China trade talks will resume early October.
Read More  | SGX Nifty traded nearly 50 points higher at 7 am (IST), signalling sustained bullishness on Dalal Street. MSCI index for Asia-Pacific shares outside Japan barely budged, up just 0.03% while Nikkei ticked up 0.10%. |
| Dow eked out a small gain Monday even as US stocks finished mixed. The Dow rose 15 points, snapping a modest two-day losing streak. The S&P500 finished flat while the Nasdaq fell 0.1%. |
Oil prices eased in early Asian trade as weak manufacturing data from Europe and Japan focused market attention on a gloomy outlook for demand, though lingering uncertainty over Saudi supply disruption braked the drop. Brent crude futures fell 29 cents to $64.48 a barrel, while WTI futures slipped 24 cents to $58.40.
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Bullish D-Street... Brokerages have raised their targets on India's main stock indices after the government on Friday announced corporate tax rate cut to 25.17% from 35% in a bid to revive the country's economic growth rate. Goldman Sachs has raised its 12-month target on the Nifty to 13,200 from 12,500. Nomura has raised its Nifty target for March 2020 to 12,545. Citi has raised the Sensex target for March 2020 to 40,500 from 39,000.
Read More Motown Rebound... India's biggest automaker, Maruti Suzuki India, expects sales of its cars in September to be higher than the previous month, Chairman RC Bhargava said. August domestic sales at Maruti Suzuki fell 34.3%, one of the biggest monthly drops in sales in recent times. Indian auto sales fell for the 10th straight month in August, marking one of the worst slowdowns in the industry's history.
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MF Selloff in Zee… Mutual funds have started selling pledged shares of Zee, rejecting the promoter's plea for an extension of the repayment deadline. ZEE shares slumped 10% on Monday to close at Rs 272 despite a stellar broader market rally as SBI Funds Management sold shares worth Rs 200 crore. Funds like ICICI Prudential and Kotak Asset Management are also believed to be on the verge of offloading the shares ahead of the repayment deadline of September 30.
Read More Look, Who's Shorting... The stock market witnessed its best two-day run in over a decade with the benchmark indices gaining 8.1 per cent on Friday and Monday. But the bullish momentum has failed to convince some traders from cutting their bearish bets. They have retained their short positions in auto, real estate and public sector banks as they are uncertain whether the cut in corporate tax rate would benefit companies in these sectors. Analysts said the benefit of the tax cut is not going to be uniform across sectors. In the auto space, concerns over pickup in demand still continues.
Read More Thomas Cook Goes Belly Up... Hundreds of thousands of holidaymakers were stranded on Monday by the collapse of the world's oldest travel firm Thomas Cook, sparking the largest peacetime repatriation effort in British history. The liquidation marks the end of a British company that started in 1841 running local rail excursions and grew to pioneer the family package holiday. Thomas Cook's demise, announced in the early hours of Monday after it failed to secure a deal with creditors or a government bailout, sparked alarm at hotels where some customers have been asked to pay their bills anew by out-of-pocket resort owners.
Read More Meanwhile...Many companies have stopped expansion plans and are reaching out to tax experts after the corporate tax for new companies has been lowered to 15%. Instead of investing directly, they are looking at formation of separate entities for new investment, as it could offer a tax arbitrage of about 10 per cent. Tax experts said most companies that have expansion plans, including the ones in pharma and engineering sectors, are evaluating setting up new entities to take advantage of the lower tax structure.
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