Economic Roundup, September 20, 2019

Economic Environment

  • Corporate tax cut

How are the Indian and global economic environments affecting the financial markets?

The financial markets rose for the week following the finance minister’s announcement of a 5% corporate tax cut. This tax expenditure could increase the budget deficit unless it helps trigger economic recovery and accelerates growth to raise the tax revenue.

On the global front, both the US Federal Reserve and the European Central Bank cut interest rates to support economic growth in the United States and to revive the economy in Europe. This is a boost to the markets on the one hand and on the other hand it confirms market worries about future economic growth.

What to expect from the markets next week?

Selling pressure will remain on the financial markets especially given the situation in Saudi Arabia and the US trade war with China. Still, despite slowing growth, on a relative basis, India continues to be the destination for foreign institutional investors as it is remains the world’s fastest growing major economy.

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