Meanwhile, a bounce in yields from lows hit last week has eased some of the concerns about the global economy.
Meanwhile, a bounce in yields from lows hit last week has eased some of the concerns about the global economy.

Indian markets may extend gains on hopes of tax relief for companies

  • Asian shares extended their gains on Tuesday as hopes for stimulus in major economies tempered anxiety about a global recession
  • Govt panel tasked with overhauling the nearly six-decade-old Income-Tax Act on Monday recommended significant relief for taxpayers

Indian stocks markets may extend gains on Tuesday tracking global peers while a government panel mulls tax relief for companies.

Asian equities rose further on Tuesday as hope for stimulus in major economies tempered anxiety about a global recession, helping boost appetite for riskier assets while drawing money from safe-havens such as bonds and gold.

MSCI's broadest index of Asia-Pacific shares outside Japan nudged up 0.04%, while Japan's Nikkei jumped 0.47%. The improved mood was helped by a rally on Wall Street overnight, with the S&P 500 gaining 1.21%

Oil futures were also down in a tentative sign that worries about an attack at a Saudi oil field over the weekend have eased, but some traders continued to monitor an Iranian tanker at the centre of a clash between Tehran and Washington.

For now, however, investors were cheered by signs that policymakers were willing to do more to support their economies in the grip of international trade frictions, led by the bruising Sino-US tariff tussle.

The immediate focus shifted to the minutes of the US Federal Reserve’s last meeting due on Wednesday. Traders keenly await the Fed’s Jackson Hole seminar and a Group of Seven summit this weekend for clues on what additional steps policymakers will take to bolster growth.

Senior White House officials are discussing a temporary payroll tax cut to boost the economy, the Washington Post reported on Monday.

Hopes for additional stimulus have risen after reports said Germany was prepared to increase fiscal spending, and after the People’s Bank of China took steps to lower corporate borrowing costs.

US stock futures were a shade lower in Asian trading, down 0.15%, while benchmark 10-year Treasuries yields eased slightly to 1.5944%, and 2-year yields traded at 1.5289%.

Markets overwhelmingly expect the Fed to cut rates again at its Sept. 17-18 policy meeting from the current 2.00%-2.25%. The Fed cut rates in July for the first time in a decade to mitigate the effects of the US-China trade row and a global slowdown.

Last week, financial markets went into a tailspin after the Treasury yield curve briefly inverted, with short-term yields trading above those of long-term paper. Investors, who feared a steep global downturn, given an inverted yield curve has presaged several past US recessions, dumped riskier assets.

Back home, a government panel tasked with overhauling the nearly six-decade-old Income-Tax Act on Monday recommended significant relief for taxpayers, including an across-the-board 25% tax rate for both local and foreign companies and changes in personal tax slabs to benefit middle and upper middle class Indians.

The “extreme rhetoric" of certain South Asian leaders, inciting violence against India, is not helping the cause of regional peace, Prime Minister Narendra Modi told US President Donald Trump over a 30-minute telephone conversation on Monday, a day after his Pakistani counterpart compared India to Nazi Germany. The conversation between the two leaders came just days after Pakistan Prime Minister Imran Khan spoke to President Trump on the Kashmir issue.

Retail sales of automobiles across the country fell 6% year on year to 1654535 units in July, as demand remained subdued due to a slowdown in the economy and lack of credit availability, data released by Federation of Automobile Dealers Associations on Monday showed. Passenger vehicle manufacturers resorted to massive reduction in production to adjust wholesales with the retail demand in the domestic market.

In primary markets, Sterling and Wilson Solar will make stock markets debut on Tuesday. The company's initial public offering (IPO) was open for subscription during 6-8 August with a price band of 775-780 a share.

Meanwhile, a bounce-back in yields from lows hit last week has eased some of the concerns about the global economy.

Gold, which is traditionally bought as a safe-haven during times of uncertainty, held steady at $1,497.02 per ounce after tumbling 1.2% on Monday, its biggest daily decline in about a month.

The Swiss franc, another safe-haven asset, was last quoted at 0.9810 per dollar, near a two-week low.

In the oil market, US West Texas Intermediate futures fell 0.41% to $55.98 a barrel in a sign of receding concern about tension in the Middle East, but some traders have warned this could be temporary.

(Reuters contributed to the story)

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