Money crackdown hits India’s corporate profit recovery

Indian Prime Minister Narendra Modi’s crackdown on black money may have an unintended consequence: a slump in consumer spending that hits India’s corporate earnings recovery. At risk is a strengthening earnings picture that has seen three quarters of gains, after operating profit fell in every quarter of 2015. Finance Minister Arun Jaitley said November 9 the move will damp consumption in the short term, a belief that’s helped send an index of consumer discretionary goods to a four-month low. Economic expansion of above 7 per cent, the $13 billion (over AED 47billion) salary boost for government staff and a good monsoon after two years of drought had led investors to bet on company profit growth accelerating. Goldman Sachs Group Inc. in October forecast corporate earnings growth in India to outpace its regional peers in the year to March. The sudden decline in money supply has muddied the picture. Modi’s decision to withdraw 500 and 1,000-rupee notes, which accounted for 86 per cent of the money in circulation, has virtually stalled the economy. While no one is predicting the anti-graft measures to push Sensex earnings into negative territory just yet, the move will disrupt segments of the economy such as property and gold where cash transactions play a vital role, analysts say. (Rajhkumar K Shaaw and Santanu Chakraborty/Bloomberg)

More from Business

  • Nasdaq set to confirm bear market as Trump tariffs trigger recession fears

    The tech-heavy Nasdaq Composite index was set to confirm it was in a bear market on Friday, down more than 20 per cent from a recent record high, as investors fled riskier assets on fears that tariffs imposed by President Donald Trump could spark a trade war and tip the global economy into recession.

  • Dana Gas and Crescent Petroleum exceed 500M boe in Khor Mor field

    UAE-based Dana Gas and Crescent Petroleum, alongside their partners in the Pearl Petroleum consortium, have said the cumulative production from their Khor Mor project, the largest non-associated gas field in Iraq, has exceeded 500 million barrels of oil equivalent (boe).

  • China to impose tariffs of 34% on all US goods

    China has announced a slew of additional tariffs and restrictions against US goods as a countermeasure to sweeping tariffs imposed by US President Donald Trump. The Finance Ministry said it would impose additional tariffs of 34 per cent on all US goods from April 10.

  • Shares bruised, dollar crumbles as Trump tariffs stir recession fears

    Stocks limped to the end of the week on Friday, the dollar was set for its worst week in a month while gold flirted with a record peak as investors feared US President Donald Trump's sweeping tariffs would tip the global economy into a recession.

  • Wall Street futures sink as tariffs fuel recession fears

    US stock index futures tumbled on Thursday after President Donald Trump's sweeping tariffs on major trade partners heightened fears of an all-out trade war that could push the global economy into a recession.

Coming Up on Dubai Eye

  • The Music Mix

    11:00pm - 10:00am

    Enjoy your favourite music back to back commercial free, tune in to the Music Mix everyday from 1 until 2 for the music you love and the news updates you need

  • Motor Mania

    10:00am - Noon

BUSINESS BREAKFAST LATEST

On Dubai Eye

  • Is There Sufficient House Supply In UAE

    Dubai’s current population is more than double compared to almost twenty years ago, which now stands at 3.7 million. Lots of families are also moving to the UAE now. So what does it mean for the property market?

  • Noon's First Female Delivery Driver

    Glory Ehirim Nkiruka is Noon’s first ever female delivery driver. In her first ever interview, she explained why she loves her job, despite the heat!