Markets escalate to day’s high on frenzied buying activities ahead of Modi's swearing in ceremony

Local equity markets steadily gaining ground have escalated to day’s high on frenzied buying activities by funds and retail investors ahead of prime minister designate Narendra Modi's swearing in ceremony later in the day, wherein street primarily awaits composition of Modi's cabinet, allocation of portfolios to the prime minister's office and his choice for finance minister, which is widely expected to go to front-runner Arun Jaitley. Extending the northbound journey, while Sensex was trading past the crucial 25,100 level, Nifty was trading little shy of the crucial 7500 mark, with gains of over 1.75%. Meanwhile, broader indices also fervently gaining ground, were up with gains of over 1.5%.

On the global front, Asian shares hit one-year high on Monday thanks to a strong session on Wall Street and a decisive win for billionaire Petro Poroshenko in Ukraine's presidential election. Sentiments also strengthened on the back of upbeat U.S. housing data on Friday, with sales of new single-family homes rising more than expected in April and the number of houses on the market hitting a 3-1/2 year-high.

Closer home, amidst broad based buying, stocks from Healthcare counter were the only loser on the index, while those from Capital Goods, Power and Public Sector Undertaking (PSU) counters were the top gainers. In non-sectoral gauge activity, steel sector stocks, namely, Tata Steel, JSW Steel, SSLT built on their morning gains on Steel Ministry seeking to keep steel out of FTA from the new government. India had signed free trade agreement (FTA) with Korea in 2009 and with Japan in 2011. Under FTA, duties on most of the products traded between the countries are either eliminated or reduced sharply to zero duty regime in phases. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1411:421; while 19 shares remained unchanged. The BSE Sensex is currently trading at 25132.26, up by 438.91 points or 1.78% after trading in a range of 25175.22 and 24912.57. There were 26 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.40%, while Small cap index up by 1.72%.

The gaining sectoral indices on the BSE were Capital Goods up by 5.00%, Power up by 3.22%, PSU up by 2.93%, Auto up by 2.89 % and Realty up by 1.82%. On flip side, Healthcare down by 0.06% was the lone loser on the index.

The top gainers on the Sensex were L&T up by 6.45%, M&M up by 6.21%, BHEL up by 4.57%, ONGC up by 3.89% and Coal India up by 3.82%. On the flip side, Bharti Airtel down by 1.01%, Cipla down by 0.58%, Dr Reddy’s Lab and Hindustan Unilever down by 0.39%.

Meanwhile, taking comfort from Double Taxation Avoidance Agreement (DTAA) that Singapore has with India, the former has replaced Mauritius as the top source for foreign direct investment into India accounting for about 25% of FDI inflows in 2013-14. India has inked double Taxation Avoidance Agreement (DTAA) with Singapore that incorporates Limit-of-Benefit (L-o-B) clause that justifies the substance in Singaporean entities, brings required certainty and avoids chances of litigations.

Notably, Singapore also has emerged as top source of FDI into the country after FDI inflows from Mauritius started drying up on fears of the impact of General Anti Avoidance Rules (GAAR) and possible re-negotiation of the tax avoidance treaty.

The controversial GAAR provision, which seeks to check tax avoidance by investors routing their funds through tax havens, will come into effect from April 1, 2016 in India and will be applicable to entities availing tax benefit of at least Rs 3 crore. India-Mauritius DTAA is being revised amid concerns that Mauritius is being used for round-tripping of funds into India even though that country has always maintained that there have been no concrete evidence of any such misuse.

According to DIPP, India attracted FDI aggregating to $5.98 billion from Singapore as against $4.85 billion from Mauritius in the last financial year 2013-14. Notably, the inflows from Mauritius during the last fiscal were the lowest since 2006-07, while FDI inflows from Singapore was the highest ever received from the country since 2006-07. lastly, Overall FDI into India grew by 8% year-on-year to $24.3 billion in 2013-14.

The CNX Nifty is currently trading at 7,492.00, up by 124.90 points or 1.70% after trading in a range of 7,504.00 and 7,428.55. There were 41 stocks advancing against 9 declining on the index.

The top gainers of the Nifty were Grasim up by 6.29%, L&T up by 6.15%, M&M up by 6.08%, Cairn India up by 4.79% and BHEL up by 4.48%. On the flip side, Asian Paints down by 1.56%, Bharti Airtel down by 1.27%, Lupin down by 1.11%, Cipla down by 1.02% and Hindalco down by 0.76% were the major losers on the index.

Asian equity indices were trading in green; Straits Times added 0.05%, Nikkei 225 advanced 0.97%, Taiwan Weighted gained 0.31% and Shanghai Composite up by 0.15%. While, Hang Seng down by 0.09% to 22,946.71 and Jakarta Index down by 0.16%.