Chennai, July 5 : While the new or hike in tax rates on some sectors may increase the government's revenues and fight inflation, it will also hurt corporate profits, market capitalisation, disinvestment plans and India's overall investment climate, said Kotak Securities Ltd. In a research report, Kotak Securities said the bulk of the recent earnings downgrades are largely because of the export taxes on steel, diesel, petrol and additional excise duty on crude oil and hoped that such measures are for a short term and do not extend to other sectors. "We note that the stock prices of all steel and many oil & gas stocks have corrected sharply on the government's move to impose new taxes. The new taxes are particularly deleterious since they are on revenues and thus, have a disproportionate impact on earnings," Kotak Securities said. According to the report, the new or the windfall taxes may raise a fair degree of concern among investors (both direct and portfolio) about the overall investment climate in India and also contrary to what the Indian government did earlier. The Indian government had cut the corporate tax rates in September 2019 and came out with production linked incentive schemes to encourage domestic manufacturing. The government's decision to impose excise duty on crude oil, effectively capping net realised price to around $70-75/bbl will further dampen investment sentiment for public sector stocks. The government decision will reduce the profits of the upstream oil public sector units (PSU), not help the downstream oil marketing PSUs. The latter will continue to make large losses on retail sales of diesel and gasoline unless the government reduces excise duties on diesel and gasoline by an equivalent amount and allow the oil marketing companies to retain the benefits; this did not happen the last time the government cut excise duty on diesel and gasoline. The increased uncertainty to earnings of metal and oil & gas PSUs will hurt investment sentiment for PSU stocks further and also, potentially derail the government's privatisation programme, Kotak Securities said. /IANS