Markets soar to day’s high on sustained buying activities

Going from strength to strength, local equity markets were trading near day’s high point on sustained buying activities by market-participants which lifted both Sensex and Nifty above crucial 28,000 and 8,400 levels respectively with gains of around three fourth of a percent after finance minister highlighted the achievements of his government on completion of first year in the office. Finance Minister claimed that there was more enthusiasm in India after Modi assumed power on May 26, 2014 and that the stability returned to the economy. Meanwhile, the session also turned out to be positive for broader indices, which though underperforming larger counterparts were trading higher with gains of around half of a percent.

On the global front, mainland Chinese stocks hit fresh seven year highs on Friday and looked set for their biggest weekly gain in two months as the market continued to rally. The index had hit a seven year-high on Thursday on hopes of more stimulus from the government after a private survey showed more weakness in the vast manufacturing sector.

Closer home, most of the sectoral indices on BSE were holding into positive territory, stocks from Banking, Public Sector Undertaking and Capital Goods counters were the prominent gainers of the session. Meanwhile, banking stocks advanced after the Reserve Bank of India extended the timeframe to spread over the shortfall arising out of sale of bad assets to 31 March 2016. On the flip side, only stocks from Realty and Metal counters were down and out in trade. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1267:1135; while 113 shares remained unchanged.

The BSE Sensex is currently trading at 28019.57, up by 210.22 points or 0.76% after trading in a range of 27828.61 and 28033.72. There were 21 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.59%, while Small cap index gained 0.57%.

The top gaining sectoral indices on the BSE were Bankex up by 1.04%, PSU up by 0.99%, Capital Goods up by 0.89%, FMCG up by 0.80%, Consumer Durables up by 0.71%. On the flip side, Realty down by 0.19% and Metal down by 0.09% were the only two losers.

The top gainers on the Sensex were SBI up by 2.76%, HDFC up by 1.89%, Sun Pharma Inds. up by 1.55%, ICICI Bank up by 1.39% and ITC up by 1.36%. On the flip side, Bajaj Auto down by 1.30%, Vedanta down by 1.27%, Wipro down by 1.13%, Hero MotoCorp down by 0.78% and Hindalco down by 0.68% were the top losers.

Meanwhile, in order to make ‘arm’s length pricing’ determination more reasonable in transfer pricing cases Central Board of Direct Taxes (CBDT) has come up with draft rules for introduction of ‘range concept’. The tax department has proposed to use multiple year data for determining the Arm's Length Price against the current practice of taking into account only one year data for calculating Arm's Length Price. The use of multiple year data is expected to provide relief to the companies on account of difficulty to provide comparable data for the immediate previous year.

The draft norms of range concept, which will be used for determination of Arm’s length price of goods and services traded between related entities, would be open for comments till May 31, 2015. Notably, since its introduction in 2001, transfer pricing regulations have always been a major area of litigation between the tax department and tax payers, which are mainly MNCs, who usually blame the tax department of being aggressive in imposition of taxes to garner more revenues.

The draft norms follow an announcement by Finance Minister Arun Jaitley in his 2014 Budget with a view to aligning transfer pricing regulations in India with the best available practices. It remains to be clarified that the 'range concept' will only apply where a minimum of nine comparable data about similar transactions are available. In case the number of comparable data is inadequate, the existing provision of 'arithmetic mean concept' would apply.

The CNX Nifty is currently trading at 8477.30, up by 56.30 points or 0.67% after trading in a range of 8420.60 and 8480.35. There were 36 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were SBI up by 2.50%, Bank Of Baroda up by 2.27%, IDFC up by 1.98%, HDFC up by 1.84% and Sun Pharma Inds. up by 1.56%. On the flip side, Ultratech Cement down by 2.60%, Vedanta down by 1.44%, Bajaj Auto down by 1.34%, Wipro down by 1.06% and Hindalco down by 0.86% were the top losers.

Asian markets were trading mostly higher; with Straits Times up by 14.48 points or 0.42% to 3,454.34; KOSPI Index up by 23.29 points or 1.1% to 2,146.10; Taiwan Weighted up by 60.24 points or 0.63% to 9,638.80; Nikkei 225 up by 61.54 points or 0.3% to 20,264.41; Shanghai Composite up by 125.8 points or 2.78% to 4,655.22 and Hang Seng up by 468.61 points or 1.7% to 27,992.33.

On the flip side, Jakarta Composite down by 5.56 points or 0.1% to 5,307.65 and FTSE Bursa Malaysia KLCI down by 4.6 points or 0.26% to 1,790.44 were among the top losers.

European Markets got off to a mix start; with UK’s FTSE 100 trading up by 23.14 points or 0.33% to 7,036.61; Germany’s DAX down by 9.59 points or 0.08% to 11,855.00 and  France’s CAC down by by 3.51 points or 0.07% to 5,143.19