Weekly Commentary – 20th September 2019

Nifty50 was sluggish through the week. Friday was an eventful day and Nifty rallied more than 5% amid a positive announcement by FM about a reduction in corporate tax rate to 22% from 30% earlier. Nifty50 +1.8%; Nifty Midcap +2.3%; Nifty Smallcap +0.4%. On the sectoral front, Nifty FMCG (+4.3%) was the top gainer, followed by Nifty Auto (+3.3%) and Bank (+3.1%). Nifty Media (-3.7%) was the top decliner followed by Nifty IT (-1.5%).

Market Updates:

• Govt cuts corporate tax rate to 22% to revive investment – With an aim to revive growth and investment in country, FM announced a slew of measures including a cut in corporate taxes. A new provision has been inserted in the Income-tax Act with effect from FY 2019-20 which allows any domestic company an option to pay income-tax at the rate of 22% subject to condition that they will not avail any exemption/incentive. The effective tax rate for these companies shall be 25.17% inclusive of surcharge & cess. Also, such companies shall not be required to pay Minimum Alternate Tax.
• Till March 31, 2020, no stressed asset MSME will be declared NPA: Finance Minister announced that banks have been told not to classify the stressed assets of MSMEs as a non performing asset till March 31, 2020.