Benchmarks trade firm on F&O expiry

Indian equity benchmarks continued their firm trade in the late afternoon session on account of buying in frontline blue chip counters. The markets started the early trade on firm note with BSE Sensex touching another lifetime high of 22,869.85 led by rally due to capital inflows amid a firming trend overseas. Traders were seen piling positions in Capital Goods, Consumer Durables and Bankex stocks while selling was witnessed in Realty and Power sector stocks. In scrip specific development, Mangalore Chemicals & Fertilizers was trading firm after Deepak Fertiliser and others made an open offer at Rs 61.75 per share for up to Rs 197 crore. The markets may remain volatile today as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. April 2014 month series to next month i.e. May 2014 series. The April 2014 F&O contracts will expire on Wednesday i.e. April 23, 2014. The stock market remains closed on Thursday i.e. April 24, 2014, on account of Parliamentary elections in Mumbai constituency.

On the global front, the Asian markets were trading mostly in red while the European markets were too trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 6,800 and 22,800 levels respectively. The market breadth on BSE was positive in the ratio of 1432:1197 while 156 scrips remained unchanged.

The BSE Sensex is currently trading at 22871.27, up by 112.90 points or 0.50% after trading in a range of 22901.65 and 22780.13. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.32%, while Small cap index up by 0.46%.

The gaining sectoral indices on the BSE were Capital Goods up by 1.48%, Consumer Durable up by 0.99%, Bankex up by 0.83%, HealthCare up by 0.73% and PSU up by 0.47% while Realty down by 0.41% and Power down 0.09% were the only losers on the index.

The top gainers on the Sensex were L&T up by 2.28%, Gail India up by 2.15%, BHEL up by 1.53%, Tata Steel up by 1.28% and Axis Bank up by 1.26%. On the flip side, TCS down 0.57%, Wipro down by 0.53%, NTPC down by 0.52%, Tata Motors down by 0.50% and Bajaj Auto down by 0.43% were the top losers on the index.

Meanwhile, in order to help the US to tackle tax evasion, India has signed an 'in substance' agreement with the US under Foreign Account Tax Compliance Act (FATCA) to combat possible tax evasion by Americans through Indian financial entities. As per the agreement, India will provide US with the available information from Indian financial institutions on offshore accounts or assets of Americans or their entities. However, the US will give information on foreign accounts of Indian individuals, but not entities. The FATCA act is aimed to check and impose withholding tax on illicit activities of some wealthy individuals who use offshore accounts to avoid millions of dollars in taxes.

India has agreed to Model 1-Inter governmental Agreement (IGA) under FATCA under which financial entities will be required to report information on US account holders to the US internal revenue service (IRS) through CBDT. According to FATCA act, the US government to sign IGAs with various countries where American individuals and companies may hold accounts and other assets. The noncompliance with FATCA requires the investor to pay 30 percent withholding tax on certain US source payments. The US Treasury introduced two formats of the IGA - Model 1 and Model 2. As per the Model 2, financial institutions are required to report information directly to the US IRS rather than their local jurisdictions.

Indian regulators like SEBI and RBI are likely to issue guidelines soon for market intermediaries to ensure compliance of FATCA. After signing of IGA with the US, these regulatory measures would immensely help Indian financial institutions to cope up with this complex regulation. The FATCA is scheduled to come into effect from July 1, 2014.

The CNX Nifty is currently trading at 6,842.35, up by 27.00 points or 0.40% after trading in a range of 6,861.60 and 6,820.75. There were only 32 stocks advancing against 17 declining ones while 1 stock remained unchanged.

The top gainers of the Nifty were Gail India up 2.39%, Ambuja Cement up 2.12%, Bank of Baroda up by 2.07%, L&T up by 2.06% and PNB up by 1.82%. On the flip side, Cairn India down by 2.42%, DLF down by 1.78%, BPCL down by 0.86%, TCS down 0.76% and Asian Paints down by 0.76% were the major losers on the index.

Asian equity indices were trading in red; Jakarta Composite down by 0.10%, Hang Seng dropped by 0.97%, Shanghai Composite slipped 0.26%, Straits Times declined 0.75%, Taiwan Weighted inched lower by 0.20% while Nikkei 225 surged 1.09%.

The European markets were trading mostly in red; France’s CAC 40 was down 0.24%, Germany’s DAX lost 0.08% and UK’s FTSE 100 gained 0.07%.