Benchmarks snap two days downfall; Nifty regains 8,700 mark

Snapping two days losing streak, Indian equity benchmarks staged an enthusiastic performance on Tuesday, by rallying over a percentage point and breaking lots of psychological levels in their northward journey on sustained buying activities by funds and retail investors on the back of positive global cues. Earlier, markets made a gap-up opening tracking firm global cues on hopes weak economic data would prompt the US Federal Reserve to leave options open on the timing of an interest rate hike. But, markets come off day’s high during late noon trades owing to profit taking in technology stocks amid strengthening of Indian rupee. Meanwhile, investors turned cautious ahead of the two-day Federal Open Market Committee (FOMC) monetary policy review which begins later today.

Barometer gauges showcased a smart recovery from intraday low levels in last leg of trade as sentiments turned optimistic after Finance Minister Arun Jaitley told lawmakers on Tuesday that India’s current account deficit will ‘hopefully’ be less than 1% of gross domestic product (GDP) in the fiscal year that begins in April. Some support also came with IMF chief Christine Lagarde’s statement that Indian economy is poised to overtake the combined GDP of Japan and Germany in the next four years on the back of recent policy reforms and improved business confidence in the country.

On the global front, European markets reversed their initial gains to trade mostly in the red on Tuesday. Asian markets ended the session mostly in the green on speculation that weaker US economic data mean the US Federal Reserve won't rush to raise borrowing costs in the world’s biggest economy.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Frontline indices managed to settle near intraday high levels with Sensex surpassing its crucial 28,700 bastion, while Nifty ended above its crucial 8,700 mark. Recovery in Indian rupee too supported the sentiments. The rupee firmed up against the US dollar and was trading at 62.73 at the time of equity markets closing as compared to Monday’s close of 62.81, tracking gains in domestic equity markets.

Meanwhile, metal shares gained on prospect of further stimulus measures from China which may raise hopes of a boost in demand in the biggest consumer. Stocks related to banking counter too edged higher as most of the banks have shown healthy growth in their advance tax deposit this quarter, with the highest payer, State Bank of India, depositing Rs 1,750 crore, 20 per cent higher than in the corresponding period of the previous year. Additionally, the iron and steel stocks too remained in action, as the government has informed that there is no dearth of iron ore in the country with 152 million tonne production against consumption of 111 MT in 2013-14.

The NSE’s 50-share broadly followed index Nifty rose by around ninety points and ended above the psychological 8,700 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by around three hundred points to finish above the psychological 28,700 mark. Broader markets too traded with traction and ended the session with a gain of around half a percentage point. The market breadth remained in favour of advances, as there were 1,381 shares on the gaining side against 1,432 shares on the losing side while 126 shares remain unchanged.

Finally, the BSE Sensex surged by 298.67 points or 1.05% to 28736.38, while the CNX Nifty soared by 90.15 points or 1.04% to 8,723.30.

The BSE Sensex touched a high and a low of 28784.35 and 28435.45, respectively. The BSE Mid cap index was up by 0.57%, while Small cap index was up by 0.20%.

The top gainers on the Sensex were Hindalco up by 5.75%, Sesa Sterlite up by 4.02%, Dr. Reddys Lab up by 3.66%, HDFC up by 2.62% and Tata Motors up by 2.47%. On the flip side, Infosys down by 1.10%, Coal India down by 0.78%, Tata Power down by 0.62%, Bharti Airtel down by 0.60% and Wipro down by 0.60% were the top losers.

The gaining sectoral indices on the BSE were Healthcare up by 1.82%, Capital Goods up by 1.70%, FMCG up by 1.51%, Consumer Durables up by 1.47% and Oil & Gas up by 1.44%, while, IT down by 0.32% and TECK down by 0.16% were the losing indices on BSE.

Meanwhile, giving big relief to multinational companies, the government has notified rules for rolling back advance pricing agreements (APA) that seek to provide predictability and stability to taxpayers. As per a Central Board of Direct Taxes (CBDT) notification, the agreement shall contain rollback provisions in respect of an international transaction. Taxpayers who have already filed an APA application or have already entered into an agreement prior to January 1, 2015, need to ensure that they file the rollback application in notified form by March 31, 2015. For fresh applications for APA for 2015-16, too, rollback application will have to be filed by March 31.

Rollback provisions essentially mean that a negotiated position on pricing of an international transaction reached under the advance pricing arrangement can be applied to a similar transaction for up to four years in the past. It relates to the pricing of assets, tangibles and intangibles, services, and funds that are transferred within an organisation in a cross-border transaction.

The notification dated March 14 amending the Income Tax Rules, 1962, defined terms such as 'rollback provision' and 'rollback year', and the procedure for bringing such a rollback provision to effect in an APA. The rules will, however, not apply if the matter is the subject of appeal before the income tax appellate tribunal (ITAT) or if any other tribunal has passed an order disposing off such an appeal.

Finance minister Arun Jaitley had announced rollback provision in his first budget in line with the government's promise to provide a predictable and a non-adversarial tax regime. However, it could not be implemented because of the absence of rules.

 The CNX Nifty touched a high and low of 8,742.55 and 8,630.80 respectively.

The top gainers on Nifty were Hindalco Industries up by 5.48%, Sesa Sterlite up by 4.31%, Cairn India up by 4.24%, Dr. Reddy's Laboratories up by 3.59% and IndusInd Bank up by 3.39%. On the flip side, Jindal Steel & Power down by 8.37%, HCL Technologies down by 0.97%, Infosys down by 0.96%, Tata Power Company down by 0.74% and Bharti Airtel down by 0.63% were the top losers.

Most of European Markets were trading in the red; Germany's DAX was down by 0.99% and France's CAC was down by 0.37%, while UK's FTSE 100 was up by 0.26%.

The Asian markets ended mostly in green on Tuesday, with China’s main stock index rising to its highest in almost seven years, breaking through a key psychological resistance level to raise investors’ hopes that the market has resumed a bull run begun midway through last year. The Bank of Japan board decided by an 8 to 1 vote to leave the bank’s policy target unchanged while revising down its near-term inflation outlook on weak energy prices as expected. The collapse of crude oil prices last year has clouded the prospect for the central bank plan to anchor 2% inflation in about two years from April 2013, when it launched aggressive easing. That has caused the BoJ to revise down its near-term inflation outlook. At the same time however, the BoJ sees the economic recovery intact. Japan’s index of leading economic indicators rose to a seasonally adjusted 105.5, from 105.1 in the preceding month. Hong Kong Unemployment Rate remained unchanged at a seasonally adjusted 3.3% compared to its preceding month.