Asia Session: India Tax Slash Boosts Nifty 50

India’s Finance Minister, Nirmala Sitharaman, has just announced massive corporate tax cuts in an attempt to boost flatlining growth in the economy.

Corporate tax for domestic companies will be slashed from 30% to 22% and manufacturing companies incorporating after October 1st will enjoy a 15% tax rate provided they start operations by 2023.

The announcement has sent Indian equities soaring with the National Stock of India Fifty (NIFTY) 50 Index climbing 5% to 11,226.0. Two-month resistance at 11,550.0 has been brushed aside and should become technical support on any pullbacks. The Nifty has broken its two-month range and now eyes the June highs around 12,075 as its next target.

The surprise India move was the highlight of an otherwise dull day in Asia after a tumultuous week. The fiscal steps by the Indian Government are likely to re-energise investor interest in the sub-continent. 2.5 years of slowing growth and disappointment in P.M. Modi’s reform progress had sapped investor confidence. India still has a non-performing loan swamp to drain, but this is most definitely a step in the right direction.

The Indian Rupee (INR) has rallied 0.65% against the U.S. dollar with USD/INR falling to 70.900 after earlier testing dollar support at 70.310. Technical resistance is at 72.000 with a break of today’s low signalling a possible move towards 69.050.

Elsewhere the GBP has climbed 0.35% to 1.2570 on hopes of a Brexit deal in the wings. Technical resistance is very near at 1.2580 with long-term resistance at 1.2800. The later will be a bridge too far without concrete progress but could be a story for next week. Some caution is warranted at these levels. Markets have been led to water on Brexit before only to find the watering hole contaminated.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

Latest posts by Jeffrey Halley (see all)