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Tax cuts send a big message to global investors: Sanjay Dutt, Quantum Securities

Sanjay Dutt, Quantum Securities-1200
It will give a signal that India is open for business, is open to feedback and this is a very important message that is going out to the global community, more than the investment and the business community here in India, asys Sanjay Dutt, Director, Quantum Securities. Excerpts from an interview with ETNOW.

Do you think the next market move will come only come once earnings evidence comes out or are markets now out of this bearish grip?
It is a real sentiment booster more than anything else. The message the government is sending from here is that India is open to feedback and is open to becoming a globally competitive market. I did a quick check and just to put some numbers in perspective, Germany has 30% corporate tax, New Zealand has 20%, Brazil 34% and China at 25%. Îndia coming to this particular level of corporate tax means a lot. More so, when Prime Minister Modi is going to be in the US as it will give the signal that India is open for business, is open to feedback and this is a very important message that is going out to the global community, more than the investment and the business community here in India.

Sunil Singhania was saying that perhaps the complexion of the market now changes. The comfort zone and the mad PE multiple that some of the mega caps are commanding will start coming down. Is it too early to comment on that?
The most important thing is people were looking for a trigger, for something to change the mood. In fact, 99% of the savvy investors knew what to buy and knew the crisis had come but they really could not figure out as to what will be the trigger to reverse the negative sentiment and the bear onslaught that we all are experiencing.

What really comes across now is that this is the trigger and more importantly, such a radical step which has been taken outside of the budget. It clearly sends the message that the government is now serious about setting the problem right and setting the sentiment right.

People will start to take risk in equity markets. Obviously, the actual impact on manufacturing will take time, but the sentiment will change.

We are talking about the tax cut but tomorrow or Monday morning, when markets open, will we start getting worried about oil again?
The real worry not go away but the feel-good factor is coming back. The consumer will spend and this Rs 1,20,000-crore-odd impact on the fisc will be easily made up from aggressive divestments. These realities will hit the Street on Monday, but markets are oversold. The extreme oversold position, the extreme negativity would correct and we would start to trade at more realistic levels. The euphoria of today would settle down but out of these, more than the Rs 1,40,000 crore benefit will go down to the economy.

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