Lower tax rates won't change fundamental concerns for banking stocks

For the second consecutive trading day, Indian equities cheered the government’s move to reduce corporation tax for India Inc. Banking stocks, in particular, seem to have benefitted the most. With a jump of over 5 per cent on Monday and 14 per cent since last Friday, the Nifty Bank index stands out as the largest gainer.  Part of these gains could be correlated with the fact that most brokerages believe the lower tax rate could strengthen earnings and the return profile of banks. For instance, analysts at Nomura say banks could see their earnings increase by 10–13 per ce.....

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