Rupee crackdown threatens corporate profit rebound

Mumbai

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.

Investors are trying to gauge the impact on company profits after Mr Modi's surprise recall of high-value currency notes last week. 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 on Nov 9 that the move will dampen consumption in the short term - a belief that has helped send an index of consumer discretionary goods to a four-month low.