In the week that was, Indian stock markets ended in the red. 2 major reasons led to this. First, a resurgence in Covid-19 cases across different pockets of the country and the looming threats and implications of a second wave, which might lead to partial/complete lockdowns, made investors nervous. Secondly, bond yields in the US are on the rise, which would mean that investors take out capital from India and put it back in developed markets as expected returns in the west rise.
That being said, before getting into some more updates of the market, like always, let’s look at an interesting trivia about income tax rates in India.
Matter of Fact
During the 1970s, Income Tax rates in India went as high as 97.75%! Yes, the highest earners in the income tax bracket during that period were basically only allowed to keep 2.25% of their total annual income. Pretty harsh, right?
Personal income tax rates in India during 1973-74 were spread across 11 slabs – with the lowest slab paying 10% while the highest ones paid 85% (added on to which was a 15% surcharge – resulting in an effective tax rate of 97.75%!) Thankfully though, over the past 50 years tax rates have steadily come down and the current highest bracket pays about 30%.
Markets Update
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Nifty50
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14,744.00
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1.91% ▼
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Nifty500
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12,314.50
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2.22% ▼
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Nifty Bank
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34,161.60
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3.76% ▼
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The Big Picture
- India’s wholesale prices rose by 4.17% in February 2021 when compared to the same period last year. This was the highest reading since November 2018, amid rises in the cost of both manufactured products and fuel & power.
- India’s trade deficit, which is the difference between a country’s imports and exports, narrowed to $12.62 billion in February 2021. It still remains higher than the $10.16 billion a year earlier.
- Foreign Exchange Reserves in India increased to $582 billion on March 12 from $580.30 billion in the previous week.
Ok, so?
Allowing FDI in Indian Insurance
During her budget 2021-22 speech, Finance Minister Nirmala Sitharaman proposed to increase the foreign direct investment (FDI) limit in insurance companies from the previous 49% to 75%. The government believes that this will benefit the sector and the economy in a number of ways – the most important of which is to provide Indian insurance companies with the much-needed infusion of capital that will help it reach more and more Indians. Okay, so how and why should you care? Click below!
And that’s a wrap for the week! Until next time – happy investing! 🙂
VP, Investment Products at Windmill Capital.
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