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My Top 7 Safe Stocks Will Benefit from More than Just the Corporate Tax Cut

Sep 26, 2019

Tanushree Banerjee, Editor, The 5 Minute Wrapup

It was an early Diwali for the Indian markets last Friday.

The government's corporate tax rate cut came as a big surprise to many. The BSE Sensex was up 8.3% in just two days.

How many times has this happened in the last decade?

Zero.

It was the biggest two-day gain in the last 10 years.

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The period just prior was one of doom and gloom. Everyone had written off the India story.

But not me...

I've been writing to you about my top 7 stock picks and how these companies will play a big part in the India story.

The average tax rate for these 7 companies was at 32.5% in FY19.

The new tax rate would have increased net profits by 10.8%. No doubt, a pleasant surprise.

But there is another benefit which I'm more excited about.

The media is talking about how the lower tax will benefit companies.

But very few are talking about the competition the tax benefits will bring in. The tax rates for setting up new companies is 15% now. A lot of private players will be interested in setting up new manufacturing facilities over the next 1 or 2 years.

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Imagine you have a business which doesn't have too much of an edge over your competition..

Now a new player comes up next to you and sells the same product. He can offer more competitive rates due to the lower tax he has to pay. Would your business survive?

This is what I believe will happen to 'run of the mill' companies. They will find it tough in the new environment.

But what about the ones that have established themselves over the years?

The businesses that are not easy to replicate? The companies which have seen many business cycles as well as competitors...and still come out strong?

These are the companies which will thrive. The tax rate cut will only add to their strength. They will compete better on price while offering more value to their clients.

These are safe stocks.

The 7 stocks I've picked for my StockSelect subscribers satisfy these criteria and more. They are well-established players. Most of them are in industries with limited competition.

And the biggest trigger for them...they will be a major beneficiaries of the India growth story.

The Indian economy is shifting from unorganised to organised players. We will see financialisation across the length and breadth of the country. Retail is another example.

These are just some of the trends that will play a big part in the Sensex 1,00,000 journey.

I believe my list of 7 stocks to buy are well positioned for this journey.

The tax cut is the icing on the cake. It has only made them stronger.

Chart of the Day

In the euphoria of the government's tax rate cuts, an important announcement went unnoticed.

The road transport and highways ministry has proposed a huge increase in re-registration of vehicles which are more than 15 years old.

The proposed hike will be implemented from July 2020. The policy change is aimed at reducing pollution by scrapping older vehicles on the road.

This might come as a welcome relief for automakers who have seen severe fall in sales over the past 1 year.

Signs of Revival in the Auto Sector

This is also reflected in the share prices of listed auto players. The BSE Auto index is down 35% from its peak in January 2018.

The upcoming festive season and the recent policy measures might just be the trigger needed to revive the sector.

A leading auto player makes it to my list of 7 stocks to buy.

I believe, rising disposable incomes and aspirations of India's youth, will be the key trends benefiting this market leader in the long run.

Warm regards,

Tanushree Banerjee
Tanushree Banerjee
Editor and Research Analyst, The 5 Minute WrapUp

PS: I believe NOW is the right time to buy the best 7 stocks in the market. Read more about my top 7 stock picks here.

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7 Responses to "My Top 7 Safe Stocks Will Benefit from More than Just the Corporate Tax Cut"

Srinath

Oct 9, 2019

Dear Madam,

Thank you very much for advising 7 best stocks.

Regards,
Srinath

Like 

Jatinder Sareen

Oct 3, 2019

Details of 7 stocks recommended
under the heading Rebirth of
India

Like (1)

JIVRAJBHAI

Sep 28, 2019

PLEASE SUGGEST THESE STOCKS.

Like (1)

MADHUSUDAN

Sep 27, 2019

Which are those 7 stocks? i click on the link and get the entire list of articles from Ms Banerjee.

REgards

Madhusudan

Like (1)

AMBARISH DAS

Sep 26, 2019

I fully agree to the above point. I am not getting it.

Like (1)

Milind DIxit

Sep 26, 2019

The link to the special report for the 7 Top stocks does not work. Please test it before you publish. Tried to go there via multiple channels. Yes I do have the Stock Select subscription.

Like (1)

vasudev rao

Sep 26, 2019

To Equitymaster

i frequently face this problem - i get emails regularly under various services - with articles like this - but when i click on the link - it does not show me the results - it takes me to the respective page - stock select or hidden treasure - but not to the specific recommendation
for example i cannot get the 7 stocks you are talking about

Like (4)
  
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