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<ul><li>The Japanese car making giant has been hit by severe slowdown in car sales in India.</li><li>Suzuki shares have lost over a sixth of its share value this year due to the fear of depleting earnings.</li><li>Maruti accounts for over 52% of Suzuki’s global sale volumes.</li></ul>India’s largest car maker Maruti Suzuki has cut production for eight months in a row due to lack of buyers. The depleting earnings for Maruti is affecting its Japanese parent Suzuki, who just announced a nearly 40% cut in its estimate for operating income this year. The shares of Maruti fell over 2% immediately after the announcement from Suzuki. "The Company hereby revises the consolidated business forecast due to decrease in Japan production in the course of restructuring final inspection scheme, slowdown in Indian automobile market, and exchange rate fluctuations," <a href="https://www.release.tdnet.info/inbs/ek/140120191010406987.pdf" data-type="tilCustomLink" target="_blank">Suzuki said in a filing</a> with the stock exchanges in Tokyo. <table style="width: 188pt;"> </colgroup> <tbody><tr> <td class="xl63" style="height:15.0pt;width:101pt">March 2020 Forecast</td> <td class="xl63" style="border-left-width: initial; border-left-style: none; width: 87pt;">Cut</td> </tr> <tr> <td class="xl64" style="height: 15pt; border-top-width: initial; border-top-style: none; width: 101pt;">Net sales</td> <td class="xl65" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none; width: 87pt;">10.30%</td> </tr> <tr> <td class="xl64" style="height: 15pt; border-top-width: initial; border-top-style: none; width: 101pt;">Operating income</td> <td class="xl65" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none; width: 87pt;">39.40%</td> </tr> <tr> <td class="xl64" style="height: 15pt; border-top-width: initial; border-top-style: none; width: 101pt;">Ordinary income</td> <td class="xl65" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none; width: 87pt;">35.30%</td> </tr> <tr> <td class="xl64" style="height: 15pt; border-top-width: initial; border-top-style: none; width: 101pt;">Net income </td> <td class="xl66" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none; width: 87pt;">30%</td> </tr></tbody></table> Brokerage house CLSA has maintained a 'buy' rating on Maruti Suzuki with a target price of ₹7,950 over the next 12 months hoping that the new models will lure some buyers who are still on the fence. The slowdown in car sales is not unique to Maruti. Car sales in India fell 20.5% in September compared to a year earlier. Aside from the economic slump in India, car buyers have shied away from showrooms expecting duty cuts and lower prices as well as fearing a loss of value for their new cars when the new emission norms kick in next year. This has been a debilitating blow for Suzuki for whom India makes for <a href="https://economictimes.indiatimes.com/industry/auto/maruti-continues-to-drive-suzukis-global-growth-story/articleshow/67860711.cms?from=mdr">over half of all its global sale volumes</a>. “In view of the current sales environment, we lower our estimates for India domestic sales to +0.2% for FY2019 (from +5.4%) and +3.7% for FY2020 (+6.4%),” JPMorgan said in a report in June. The steady decline in car sales in India has been the worst in 18 years, according to the Society of Indian Automobile Manufacturers (SIAM). In September 2001, after the tech bubble burst plunging the global economy into a temporary crisis, the sales had dropped down by 21.91%. In rural India, the decline in demand for cars is attributed to a protracted farm crisis, made worse by the ongoing water crisis and deficient monsoon in many parts. This has had a significant impact on Maruti, which has a deeper reach and penetration outside the big cities too. People in India increasingly prefer cab aggregators like Ola and Uber, or even <a href="https://www.businessinsider.in/cars24-used-cars-startup-could-soon-turn-profitable-will-breakeven-by-december-2019/articleshow/69993448.cms">second hand cars to new ones</a>. SEE ALSO: <a href="https://www.businessinsider.in/business/corporates/news/mahindra-suvs-and-pick-up-trucks-are-a-rage-in-south-africa-even-in-a-shrinking-market/articleshow/71518308.cms" data-type="tilCustomLink" target="_blank">Mahindra SUVs and pick-up trucks are a rage in South Africa even in a shrinking market</a> <a href="https://www.businessinsider.in/union-budget-2019-indian-government-announces-tax-subsidy-for-purchasers-of-electric-vehicles/articleshow/70091003.cms">Tata Motors, Maruti, Mahindra will benefit from tax deductions on electric vehicles</a> <a href="https://www.businessinsider.in/cars24-used-cars-startup-could-soon-turn-profitable-will-breakeven-by-december-2019/articleshow/69993448.cms">EXCLUSIVE: Cars24 is racing towards profitability as Indians choose used cars over new ones</a> <a href="https://www.businessinsider.in/tata-motors-jaguar-land-rover-moodys-downgrade/articleshow/69889499.cms">Jaguar Land Rover is dragging Tata Motors along in its downward spiral</a>

Suzuki just slashed its operating income forecast by 40% citing slower sales in India

<ul><li>Indian markets opened flat following cues from <keyword id="90570" type="General" weightage="20" keywordseo="sgx-nifty" source="Orion">SGX Nifty</keyword>, an early indicator of the market, which was trading flat to negative.</li><li>Today all eyes will be on the <keyword id="117388" type="General" weightage="20" keywordseo="us-fed" source="Orion">US Fed</keyword> meeting that may result in a sharp interest rate hike.</li><li>Maruti Suzuki, Tata Motors, Bajaj Finance among stocks to watch out for on July 27.</li></ul>Indian markets have opened flat as investors remained cautious ahead of the Fed meeting today – where a decision could be made on possible interest rate hikes. <keyword id="6484188" type="General" weightage="20" keywordseo="sensex" source="Orion">Sensex</keyword> was up 0.09% or 50 points higher at 55,319 while <keyword id="66115" type="General" weightage="20" keywordseo="nifty-50" source="Orion">Nifty 50</keyword> was up 0.08% or 14 points at 16,498. Meanwhile, cues from Asia markets were negative as they traded lower ahead of Australia’s inflation report and US Fed’s policy decision. On Tuesday, the US market ended sharply lower as a profit warning by Walmart dragged down retail shares; and exceptionally weak consumer confidence data added to fears on spending. Larsen and Toubro was the biggest gainer on the Nifty 50 index after its strong June quarter earnings that saw a 45% growth in net profit to ₹1,702 crore in spite of it being a seasonally weak quarter. However, investor sentiment was weighed down after the International Monetary Fund (IMF) cut India’s 2022 growth forecast to 7.4% from 8.2% in April citing less favourable macro conditions and rapid policy tightening. Investors await the June quarter earnings release of Maruti Suzuki India, Tata Motors and Bajaj Finance scheduled today. Meanwhile, shares of food delivery aggregator Zomato bounced 5% after crashing for two consecutive days on expiry of a one year lock in period for promoters, employees and other investors. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/indias-newly-digitized-msmes-need-offline-marketing-as-much-as-online/articleshow/93138395.cms">India’s newly digitized MSMEs need offline marketing as much as online</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/lt-reports-a-stellar-q1-but-remains-cautious-on-outlook-due-to-too-many-moving-pieces/articleshow/93141717.cms">L&amp;T reports a stellar Q1 but remains cautious on outlook due to ‘too many moving pieces’</a>

Markets open flat ahead of the US Fed meeting today

New Delhi, <keyword id="125045" type="COMPANY" weightage="20" keywordseo="Fitch-Ratings">Fitch Ratings</keyword> on Tuesday raised <keyword id="3658" type="COUNTRY" weightage="20" keywordseo="India">India</keyword>'s <keyword id="162658" type="PERSON" weightage="20" keywordseo="gdp-forecast">GDP forecast</keyword> to -9.4 per cent in the current fiscal year to March 2021 from a previously projected contraction of 10.5 per cent after the economy staged a sharper rebound in the second quarter. In its <keyword id="503893" type="ORGANIZATION" weightage="20" keywordseo="Global-Economic-Outlook">Global Economic Outlook</keyword>, Fitch said the coronavirus recession has inflicted severe economic scarring and the country needs to repair balance sheets and increase caution about long-term planning. "We now expect GDP to contract 9.4 per cent in the fiscal year to end March 2021 (FY21) (+1.1 percentage point), followed by +11 per cent growth (unchanged) and +6.3 per cent growth (+0.3pp) in the following years," the rating agency said. The projections compare to a GDP growth of 4.2 per cent in 2019-20 (April 2019 to March 2020) fiscal and 6.7 per cent annual expansion between 2015 and 2019. In September, Fitch had sharply lowered its forecast for India's gross domestic product (GDP) to a contraction of 10.5 per cent in current fiscal 2020-21 (FY21) versus its previous estimate of 5 per cent contraction. On Tuesday, Fitch said the Indian economy staged a sharper rebound in the July-September quarter from the coronavirus-induced recession. GDP fell 7.5 per cent year-on-year, up from -23.9 per cent in the April-June quarter. "The rebound in activity was especially sharp in the manufacturing sector: output reached its pre-pandemic level in 3Q20 (July-September), and the manufacturing PMI hints at further gains," it said adding that manufacturing is buoyed by strong demand for autos and pharmaceutical products, in particular. The rebound in the services sector was more muted amid continued social distancing, with containment measures scaled back only gradually. "The outlook is brighter owing to an expected rollout of various vaccines in 2021. India has pre-ordered 1.6 billion doses including 500 million doses of the Oxford/AstraZeneca vaccine. Distribution should allow a faster-than-expected easing of social-distancing restrictions and boost sentiment," it said. However, it seems likely that the vaccine rollout over the next 12 months will not reach the majority of the people given the huge logistical and distribution challenges in a heavily populated country like India, Fitch said. Regional shutdowns are likely in the next few months while the virus is still spreading. The coronavirus recession, it said, has nevertheless inflicted severe economic scarring. "The need to repair balance sheets, increased caution about long-term planning, and firm closures will limit investment demand. Furthermore, increased financial-sector weakness amid deteriorating asset quality will hold back credit provision," the rating agency said. The failure of another bank in recent weeks the third failure in the past 16 months underlines the challenges in the financial sector. Consumer prices have continued to accelerate in recent months, buoyed by lingering supply disruptions. This, Fitch said, has deterred <keyword id="102024" type="COMPANY" weightage="20" keywordseo="The-Reserve-Bank-of-India">the Reserve Bank of India</keyword> (RBI) from resuming its easing cycle. "We think inflation has now peaked and should start to decelerate rapidly on favourable base effects and an easing of supply disruptions. This should provide room for the RBI to cut interest rates in 2021," it said. Fitch saw consumer price inflation at 4.9 per cent in the current fiscal, which would ease to 3.5 per cent in the next. For the global economy, it projected a less severe decline in GDP at -3.7 per cent in 2020 compared to -4.4 per cent in the September projection. It also revised up its annual world GDP growth forecast for 2021, but only modestly, to 5.3 per cent (from 5.2 per cent), as the deteriorating outlook in the very near term partially offsets a stronger outlook from the sector half of the year. "We are now significantly more optimistic for 2022, as we assume vaccine rollout will facilitate a material easing in social distancing," it said. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/top-stocks-to-watch-ril-maruti-suzuki-nmdc-sbi-ongc-eicher-motors-likhitha-infrastructure-tata-consumer-and-others/articleshow/79600409.cms">Top stocks to watch — RIL, Maruti Suzuki, NMDC, SBI, ONGC, Eicher Motors, Likhitha Infrastructure, Tata Consumer, and others</a> <a href="https://www.businessinsider.in/india/news/petrol-is-less-than-a-rupee-away-from-being-more-expensive-than-it-has-ever-been-for-indian-consumers/articleshow/79601841.cms">Petrol is less than a rupee away from being more expensive than it has ever been for Indian consumers</a> <a href="https://www.businessinsider.in/stock-market/news/top-stock-movers-ongc-hdfc-bank-nmdc-pfizer-spicejet-indigo-irctc-tata-chemicals-and-others/articleshow/79602525.cms">Top stock movers — ONGC, HDFC Bank, NMDC, Pfizer, SpiceJet, IndiGo, IRCTC, Tata Chemicals, and others</a>

Fitch improves forecast of Indian economy — sees GDP contraction of 9.4% for FY21

<ul><li>Two of the world's largest car makers have come together to form a capital tie-up, according to Japanese public broadcaster NHK.</li><li>Suzuki is one of the world's leading small car maker while Toyota is known for its bigger variants.</li><li>Suzuki operates in India through its subsidiary Maruti while Toyota has seen success with its SUVs like Innova in India.</li></ul>Japanese car makers Toyota and Suzuki have decided to pool in capital expanding their existing partnerships in electric vehicles, according to the <a href="https://www3.nhk.or.jp/nhkworld/en/news/20190828_58/" data-type="tilCustomLink" target="_blank">country's public broadcaster NHK</a>. This marks the biggest consolidation in recent times in the global automobile industry, which has been going through a rough face recently due to slowing economies around the world, falling demand for cars, and technological leaps that threaten the very existence of traditional car makers. Suzuki, which specialises in affordable compact cars, had been struggling to keep pace with the huge costs of investing in research including self-driving cars.. The two companies announced a tie-up to produce electric vehicles and compact cars for each other to better compete with fast-changing technologies in the global auto industry. The rise of cab hailing services like Uber and Ola have also eaten into the mobility pie. The unravelling trade war between US and China has dented sales and political events like Brexit (Britain's exit from the European Union) have cast an ominous shadow on businesses. <a href="https://www.businessinsider.in/new-bs-vi-norms-and-falling-auto-sales-hurt-car-makers/articleshow/70858557.cms" data-type="tilCustomLink" target="_blank">Emission norms are getting stricter</a> across the world and that is adding the burden of investment on car makers at a time when there are fewer buyer in the market. Earlier this month, <a href="https://europe.autonews.com/automakers/toyota-trims-full-year-profit-forecast" data-type="tilCustomLink" target="_blank">Toyota cut its full-year forecasts</a> citing unfavorable currency exchange rates while the sales grew a mere 4%. Suzuki too has <a href="https://www.autocarpro.in/news-international/india-slowdown-weighs-on-suzuki-global-production-43675" data-type="tilCustomLink" target="_blank">cut global production for the fifth month</a> in a row in June 2019, including in its biggest market India, where car sales have now declined for 10 straight months. The partnership will be a threat to car makers in India, like Tata Motors, M&amp;M, Hyundai, who are also in a state of flux like much of the world for similar reasons- slowing growth and demand, falling sales, and the need to invest in new technologies. Suzuki has deeper roots in India thanks to its partnership with Maruti Suzuki, the country's largest car maker with an enviable distribution network. Toyota too has seen some success in India since it entered the mass-market segments in India in the second half of the 2000s. The sports utility vehicle Innova has been a runaway success and nearly synonymous with the category. Other models have made a mark in India although not as big as the Innova. The two companies together have a history of over 200 years and the partnership reflects both the current state and the future possibilities. Few in the world may have werewithall to battle the combined muscle-- financial, expertise, and brand value-- of Suzuki and Toyota in the journey to electric vehicles and subsequently to newer technologies like automated driving etc. SEE ALSO: <a href="https://www.businessinsider.in/suzuki-earnings-estimate-cut-as-marutis-india-sales-fall/articleshow/70128693.cms" data-type="tilCustomLink" target="_blank">Suzuki just lost nearly $2 billion in 2 days because of what’s happening in India</a>

Suzuki and Toyota have decided to pool money to beat competition in global auto industry

<ul><li>The price of <keyword id="4956340" type="General" weightage="20" keywordseo="indian-rice" source="Orion">Indian rice</keyword> has increased by a tenth in India and abroad.</li><li>Bangladesh reduced its import duty and tariff to 25% and allowed the import of non-basmati rice.</li><li>This prompted more Indian traders to export rice out of India in order to clock in more income.</li></ul>After wheat prices mixed up the thalinomics of Indians due the heatwave, we might be looking at another staple affected this season – rice. Thanks to <a href="https://www.businessinsider.in/india/news/the-winds-of-change-are-changing-the-fortunes-of-indian-farmers/articleshow/92487685.cms">delayed monsoons</a> in North India, the Kharif crop of rice might be the next victim of climate change. “While it is also still early, the season has begun slowly. The area sown area is lagging prior year trends across all key segments, with deficiencies especially high in rice, coarse cereals and oil seeds. The area sown through 17 June was reported at c.10.0mn hectares, compared with c.10.8mn hectares for the same period last year,” said a report by Barclays. The research firm expects sowing activity to pick up in the coming weeks as rainfall spreads. But speculation is already driving up the prices of rice within and outside India. The price of Indian rice increased by a tenth, after Bangladesh lowered its import duties. <div type="image" title="Slow sowing, wary global buyers can take rice prices on the same path as wheat" msid="92489205" hostid="261"></div> Bangladesh’s recent policy changes are driven by the same fears that made the Indian government curb wheat exports a few weeks back. The country reduced its import duty and tariff to 25%, from the previous 62.5%, on June 22. It also allowed the import of non-basmati rice till October 31. The neighboring country — which is already undergoing staples shortage due to the Russian-Ukraine war and India’s ban on wheat export — fears that India may end up banning the export of rice as well. Notably, global rice commodity prices have also been increasing <a href="https://timesofindia.indiatimes.com/business/india-business/not-just-wheat-even-global-rice-prices-have-been-climbing-for-fifth-month-in-a-row/articleshow/92126008.cms">since January</a> this year. This incident became the perfect example of<a href="https://www.businessinsider.in/finance/news/indias-central-bank-hikes-interest-rates-by-50bps-to-4-9/articleshow/92073644.cms"> globalized inflation</a> that the Indian central bank governor warned about in the last policy announcement. “Accounting for the recent surge in cyclical food prices, a normal monsoon and elevated international commodity prices, we recently raised our CPI forecasts. We now expect CPI inflation to average 6.5% in FY22-23, which is still lower than the RBI’s <a href="https://www.hindustantimes.com/business/rbi-monetary-policy-inflation-likely-to-hover-around-6-7-for-fy-2022-23-says-101654664490921.html">6.7% estimate</a>,” according to the Barclays report. <cmsannotation type="cmsannotation" annotationid="What happened to wheat can happen with rice too" comment="subhead" text="What happened to wheat can happen with rice too">What happened to wheat can happen with rice too</cmsannotation> The government of India had banned wheat exports in May 2022 due to food security concerns, even though it emerged as the key supplier of wheat in the aftermath of Russia-Ukraine war. The heatwave also reduced India’s wheat output projection for FY2023 to 106.4 million metric tonnes from the previous 111.4 million metric tonne projections. The imposition of the ban also <a href="https://www.businessinsider.in/india/news/wheat-export-ban-seems-to-be-taking-effect-as-atta-prices-soften/articleshow/91908520.cms">reduced the price </a>of wheat by at least 5% in the first 10 days, compared to the <a href="https://www.theweek.in/news/biz-tech/2022/05/10/explained-wheat-flour-price-record-high-india-whats-causing-this.html">record high</a> it reached at the start of May before the ban. The country allowed the export of around 750,000 metric tonnes in two tranches over the past month. As per media <a href="https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/agriculture/061422-india-may-allow-wheat-exports-to-five-nations-soon-third-tranche-since-ban-sources">reports</a> India may allow wheat exports to five nations Bangladesh, United Arab Emirates, Indonesia, Yemen, and Oman in the near term. Indonesia is one of the largest wheat importers in the world, while Bangladesh and UAE usually purchase significant volumes of wheat from India. So when India banned wheat export, these countries were bound to face a negative impact of that decision. Bangladesh with its recent policy changes is just trying to prepare for the worst. <cmsannotation type="cmsannotation" annotationid="Indian rice exports are rising too" comment="subhead" text="Indian rice exports are rising too">Indian rice exports are rising too</cmsannotation> Bangladesh’s revised import policy has prompted more Indian traders to export rice out of India in order to clock in more income, leading to a 10% jump in rice prices in the last five days. “In the last five days, prices of Indian non-basmati rice have risen to $360 per tonne from $350 per tonne in the global markets. This has happened after the news from Bangladesh came in,” BV Krishna Rao, president of the Rice Exporters Association, said. Suraj Agarwal, CEO of rice-manufacturing company Tirupati Agro Trade, Bangladesh usually buys rice from West Bengal, Uttar Pradesh and Bihar, where the rice prices have shot up 20% for common varieties of rice. The price rise in these states have increased the price of rice to 10% in other states as well. Notably, India has a market share of 40% in the global rice trade. The country exported non-basmati rice worth $6.11 billion in 2022 and $4.8 billion in FY2021, according to the data shared by Directorate General of Commercial Intelligence and Statistics. In terms of weight, India exports 21.2 million tonnes in FY22 from 17.8 million tonnes in the previous year. SEE ALSO <a class="tout-title-link" href="https://www.businessinsider.in/stock-market/news/adani-enterprises-maruti-suzuki-infosys-among-stocks-to-watch-out-for-on-june-27/slidelist/92481042.cms">Adani Enterprises, Maruti Suzuki, Infosys among stocks to watch out for on June 27</a> <a href="https://www.businessinsider.in/stock-market/news/oil-prices-could-slump-to-75-a-barrel-in-a-recession-or-jump-to-150-if-european-sanctions-slam-russian-supplies-bofa-says/articleshow/92474354.cms" data-type="tilCustomLink">Oil prices could slump to $75 a barrel in a recession — or jump to $150 if European sanctions slam Russian supplies, BofA says</a> <a href="https://www.businessinsider.in/international/news/tesla-is-laying-off-workers-who-only-just-started-and-withdrawing-employment-offers-as-elon-musks-job-cuts-begin/articleshow/92470514.cms" data-type="tilCustomLink">Tesla is laying off workers who only just started and withdrawing employment offers as Elon Musk's job cuts begin</a>

Slow sowing, wary global buyers can take rice prices on the same path as wheat

<div class="KonaFilter image-container display-table"><div><div class="image on-image">Carlos Barria/Reuters</div></div></div><ul><li>Equity strategists at Bank of America Merrill Lynch, like many others, expect the corporate tax cut to boost company earnings. </li><li>But BAML thinks the boost will be short-lived, probably not beyond 2018. </li><li>More profits would mean more competition that could drive down margins, and the Fed could speed up interest rate hikes, the bank said in a note on Wednesday. </li></ul> Equity strategists at Bank of America Merrill Lynch raised their forecast for corporate profits this year, thanks to the expected boost from lower corporate taxes. But they're not anticipating a boost to growth far beyond December. In a note on Wednesday, a team of strategists led by Dan Suzuki said they raised their 2018 S&amp;P 500 earnings per share target by 10% to $153. They'd already lifted the target late last year, just before President Donald Trump signed the <a href="http://www.businessinsider.com/trump-gop-tax-reform-bill-pass-house-bracket-rates-changes-2017-12">Tax Cuts and Jobs Act</a> into law."The biggest impact on earnings from tax reform comes from the lowering of the federal tax rate from 35% to 21%, making up roughly $10 of the $14 increase," Suzuki and his team wrote. "Buybacks represent another $3 of the increase, with some modest offsets from the minimum foreign tax rate and the cap on interest deductions."This boost, however, is less than the full tax-cut benefit they estimated last year, as some companies have already announced how they plan to spend their windfall, including <a href="http://www.businessinsider.com/trump-gop-tax-plan-companies-rush-to-announce-special-bonuses-pay-hikes-2017-12">one-time employee bonuses</a>.And beyond 2018, the strategists think tax reform could in fact be a deterrent to earnings growth. They cited three reasons. First, companies would be able to compete better with higher returns. While that's usually good for consumers, the downside is that the drive to increase market share could hurt company margins over time. Some industries like retail are already facing this predicament. Secondly, BAML argues that stronger growth could prompt the Federal Reserve to raise interest rates faster than it is expecting, which could then turn around and be a drag on the economy.One of the biggest criticisms of rate increases has been low inflation, the reasons for which Fed Chair Janet Yellen has said are <a href="http://www.businessinsider.com/fed-chair-jerome-powell-inflation-rick-rieder-2017-11">mysterious</a>. But with most major economies around the world solidly in expansion, and in a tight US labor market, many strategists have flagged that 2018 could be a year when inflation becomes an issue to deal with again.Also, BAML recalled that tax reform was passed in 1986, one year before the slump into a bear market and shortly before the savings and loan crisis. Sure, the stock market got double-digit earnings growth from the tax law, but it didn't stop the descent. "Our economists expect only a modest lift to GDP growth from tax reform over the next couple of years, with growth slowing from 2.6-2.7% in 2018 to 2.2-2.3% in 2019," Suzuki said. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/bitcoin-paul-krugman-trump-tax-economic-policies-tech-stocks-2017-12">THE BOTTOM LINE: Bitcoin mania, a Nobel Prize-winning economist talks Trump, and a deep dive on unstoppable tech stocks</a></h3> <div> </div> </div>

BANK OF AMERICA: Tax reform could be a drag on company profits by next year

<ul><li>The Finance Ministry has allowed all states to borrow a cumulative ₹3.20 lakh crore from the market between April-December. </li><li>The Ministry of Electronics and IT (Meity)expects social media companies to put more efforts in curbing the spread of misleading content. </li><li>Mukesh Ambani-led Reliance Industries Ltd's net debt will fall even if energy and retail demand struggles for six months. </li><li>Economic growth is likely to plummet to a multi-decade low of 1.6% in fiscal year 2020-21 due to COVID-19. </li></ul>Following are the top business stories of April 8. Finance Ministry allows states to borrow ₹3.20 lakh cr from market The Finance Ministry has allowed all states to borrow a cumulative ₹3.20 lakh crore from the market between April-December. Centre releases ₹14,103 cr GST compensation to states; more to be released soon In a bid to provide further relief to states amid the coronavirus outbreak, the finance ministry has released about Rs 34,000 crore in two phases to states as compensation for their revenue loss in the goods and services tax (GST) regime. IT Ministry looking for more efforts from social media to check misleading content amid COVID-19 The Ministry of Electronics and IT (Meity)expects social media companies to put more efforts in curbing the spread of misleading content that has the potential to cause harm to the society, especially in the present crisis of COVID-19, a senior official said on Wednesday. Rupee slides 70 paise to record low of 76.34 against dollar The rupee plunged by 70 paise to its life-time low of 76.34 against the US dollar on Wednesday as a rise in coronavirus cases in the country fanned fears of the government extending the lockdown to contain the pandemic. India's GDP may plummet to multi-decade low of 1.6 pc in FY21: Goldman Sachs Economic growth is likely to plummet to a multi-decade low of 1.6 per cent in fiscal year 2020-21 due to COVID-19 pandemic and ensuing measures like lockdowns and social distancing, an American brokerage said on Wednesday in one of the bleakest forecasts on GDP yet. Equities surrender gains as virus concerns weigh; IT, bank stocks skid Equity benchmarks failed to hold on to intraday gains on Wednesday as investors turned jittery amid an unabated rise in coronavirus cases. Economists pitch for Rs 3 lakh cr additional package to tide over COVID crisis Economists at SBI on Wednesday said a bulk of the Rs 1.75 lakh crore coronavirus aid package announced by the Includes budgeted elements and pitched for a Rs 3 lakh crore top-up to help the economy tide over the COVID-19-related challenges. Grofers to hire 5,000 people over 2 weeks to ramp up capacity Online grocery platform Grofers is looking at hiring 5,000 employees to ramp up its capacity to meet the spike in orders amid the nationwide lockdown. RIL's net debt to fall despite struggling energy, retail demand and delay in asset sales Billionaire Mukesh Ambani-led Reliance Industries Ltd's net debt will fall even if energy and retail demand struggles for six months and the planned asset sales are delayed, analysts said. Fuel demand seen falling 40 pc in April: Report The fuel demand, which witnessed a fall by around 20% in March amid the lockdown, likely to decline further to 40% in April, impacting pricing and increasing borrowing cost for oil marketing companies, according to a report. Maruti cuts production by 32% in March The country's largest carmaker Maruti Suzuki India has decreased production by 32.05% in March, according to a regulatory filing by the company. SEE ALSO:<a href="https://www.businessinsider.in/topic/coronavirus">Coronavirus News and Updates</a> <a href="https://www.businessinsider.in/india/news/how-to-check-coronavirus-symptoms-at-home/articleshow/74960334.cms">What are the Coronavirus symptoms and how to check for them at home</a>

From India’s plummeting GDP to Finance Ministry allowing states to borrow money from market- here’s what you might have missed in headlines today

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image">Apple</div></div></div>NEW YORK (Reuters) - <keyword id="28249" type="COMPANY" weightage="60" keywordseo="europe">Europe</keyword>, long a scapegoat for weak earnings at U.S. multinational companies, is now looking like a more dependable source of profits, and that could make some stocks that have lagged this year's rally more enticing to investors.
Big players in the technology sector, which has the highest exposure to Europe, are among those best positioned for a boost to the bottom line from the region's gradual recovery.
On a price-to-earnings basis, tech as a group is nearly 8 percent cheaper than the benchmark S&amp;P 500 index, now at its most expensive since late 2008, suggesting some tech stocks may have room to catch up.
Tech names with some of the highest exposure to Europe, based on Bank of America Merrill Lynch data, have mostly underperformed this year. IBM <IBM.N> is down 8.5 percent on the year, while Oracle <ORCL.N>, is up just 3.7 percent. Both derive at least 32 percent of their sales from Europe. Meanwhile the S&amp;P 500 &lt;.SPX&gt; is up 25 percent.</ORCL.N></IBM.N>
Energy, which also has high exposure to Europe, lags the S&amp;P 500's gains as well.
The euro zone, a source of weak sales for S&amp;P 500 companies for several quarters, emerged from its recession earlier this year. If its recovery persists, the region could help U.S. earnings get off their own path of lackluster growth.
"It's important for investors to realize Europe doesn't have to be a hole anymore in earnings," said Joseph Quinlan, managing director and chief market strategist at U.S. Trust, Bank of America Private Wealth Management in New York. "Even a little growth in Europe is going to go a long way to help boost the profitability of U.S. multinationals."
To be sure, a rebound in Europe is expected to be slow and spotty, much like the U.S. recovery, and many argue optimism about the improvement is premature.
While the European Commission has forecast 1.1 percent GDP growth in 2014 after a 0.4 percent contraction this year, the European Central Bank last month surprised investors by cutting interest rates to help spur its tepid growth.
<h3>NO PREMIUM FOR FOREIGN EXPOSURE</h3>
Relative enterprise valuation data on companies with the most foreign exposure are trading close to their steepest discount to more domestically oriented names in the last decade, BAML data showed, while its global fund manager survey showed managers are overweight U.S. and U.S.-centric stocks and underweight more foreign-exposed ones.
The tech sector's forward PE is 14.1 times expected earnings, among the lowest of the 10 S&amp;P sectors, Thomson Reuters StarMine data shows. The PE for energy, which has the third-largest exposure to Europe after materials, is 13.1, lowest of any sector.
Meanwhile, one of the least-exposed sectors to Europe, consumer discretionary, sports a multiple of 18.2. The overall S&amp;P 500 is trading at 15.3 times forward 12-month earnings, the most expensive it has been by that measure since the fourth quarter of 2008.
Within tech, IBM's PE is 9.9, and Oracle's is 11.7. Hewlett-Packard's forward PE is 7.5, expanding from around 4 in January, as its stock is up nearly 90 percent this year.
As a region, Europe accounts for the biggest part of overseas sales for U.S. companies, representing about 10 percent of S&amp;P 500 company sales, S&amp;P data shows.
"I would say there's still upside in these global cyclical companies," Quinlan said. "There's room to put money to work still."
<h3>THE TIDE IS TURNING</h3>
Results from U.S. companies generating the bulk of sales overseas turned the corner in the third quarter, and fourth-quarter results for that group are expected to improve more, thanks largely to Europe, according to Mizuho Securities USA.
"What we began to see in the third quarter was some evidence that the improvement in Europe is filtering through profits here in the U.S.," said Carmine Grigoli, chief U.S. investment strategist at Mizuho Securities USA in New York.
Based on results from 83 S&amp;P 500 companies that generate 60 percent or more of revenue from overseas, year-over-year earnings declined 10 percent in the first half of the year and were down 0.4 percent in the third quarter. They are expected to rise 3.3 percent in the fourth quarter, Mizuho's data showed.
That compares with the S&amp;P 500's 2.5 percent profit gain in the first half and 4.5 percent gain in the third quarter.
Revenue for those 83 companies fell 5.3 percent in the first half and rose 0.3 percent in the third quarter, while it is forecast to increase 1 percent in the fourth quarter.
Moreover, U.S. companies have begun to talk about Europe in a more positive light. Federal Express <FDX.N> and Ford Motor Co <F.N> were among companies citing an improving picture for the region in the latest reporting period.</F.N></FDX.N>
Ford in October posted stronger-than-expected quarterly results and boosted its full-year global profit forecast based on its European outlook and overseas demand. It said its European unit will be profitable in 2015, earlier than previously expected.
"It's been a huge shift in the rhetoric and the outlook over the past couple of quarters," in terms of Europe, said Dan Suzuki, equity strategist at Bank of America Merrill Lynch in New York.
(Reporting by Caroline Valetkevitch; Editing by Dan Burns and Bob Burgdorfer)

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From India’s plummeting GDP to Finance Ministry allowing states to borrow money from market- here’s what you might have missed in headlines today

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