Local bourses retreat after scaling fresh highs

Indian equity markets after making a gap up start are oscillating in a tight range and are currently trading past their crucial psychological 18300 (Sensex) and 5500 (Nifty) level respectively. However, Indian equity market after scaling fresh high have retreated as the frontline equity index  after surpassing its 6 month level of 18400 (Sensex) and 5600 (Nifty) mark, have shrunk to the previously held bastions, which are now serving to be tough support level.

Buoyed by the optimism across the board, local shares after taking a breather in the previous session, resumed their northbound trajectory. Asian shares rebounded on Friday, on upbeat U.S. economic data and signs of progress in Greece's efforts to avoid a debt default. Investors were encouraged by news the European Central Bank plans to swap its Greek debt holdings for new bonds once debt-restructuring negotiations are complete, moving Athens a step closer to securing a second bailout package critical to avoiding a default. A batch of U.S. housing, jobless and manufacturing data showing strength in world's biggest economy, which helped send the Dow Jones Industrial Average to its highest close in almost four years, further lifted the mood. Meanwhile, the US future indices too were showing an uptick in the screen trade.

Back home, on the BSE Sectoral front, although buying was broad based, however, stocks from Capital Goods, Power and Realty counters emerged as the top gainers. The broader indices outpacing frontline indices, yet again emerged victorious. The overall market breadth on BSE was in the favour of advances which thrashed declines in the ratio of 1746:642, while 91 shares remained unchanged.

The BSE Sensex is currently trading at 18,371.97, up by 217.98 points or 1.20%. The index has touched a high and a low of 18,423.06 and 18,302.97 respectively.   There were 21 stocks advancing against just 9 declining one’s on the index.

The broader indices are continued outperforming benchmarks; the BSE Mid cap and Small cap indices surged 1.39% and 1.41% respectively.

The top gaining sectoral indices on the BSE were, CG up by 4.88%, Power up by 4.67%, Realty up by 2.58%, PSU up by 2.55% and CD up by 2.39%. While, there were no losers on the index.

The top gainers on the Sensex were BHEL up by 11.37%, Sterlite Industries up by 4.10%, L&T up by 3.88%, SBI up by 3.55% and Coal India up by 3.40%.

On the flip side, Hero MotoCorp down by 1.62%, Maruti Suzuki down by 1.05%, Bajaj Auto down by 0.92%, Cipla down by 0.78% and Sun Pharmaceuticals down by 0.64% were the losers on the Sensex.

Meanwhile, the Standing Committee on Finance headed by former Finance Minister, Yashwant Sinha is to meet today to discuss the report on the Direct Taxes Code (DTC) Bill. The bill favours raising income tax exemption to Rs 3 lakh from the current Rs 1.5 lakh.  Finance Minister Pranab Mukherjee had tabled the DTC Bill in Lok Sabha in August 2010 and it was referred to the Standing Committee for scrutiny. The committee had considered the draft of the report on the Bill last week but the adoption was postponed as certain issues were yet to be resolved.

The Standing Committee is likely to submit its report before the Budget session of Parliament beginning March 2012. The committee wants the government to raise the income tax exemption to Rs 3 lakh from Rs 2 lakh proposed in the original bill in view of the near double-digit inflation. Further, the parliamentary panel has scrutinized the code in detail and has suggested several changes, including further widening of income tax slabs, lowering of wealth tax threshold and anti-abuse provisions with riders to ensure that taxmen don't get discretionary powers to harass taxpayers.

The Committee has also proposed categorization of the home and commercial property for the purpose of income tax. It has suggested that these two sources should be accorded different tax treatment. It also wants the government to incorporate provisions to prevent misuse of the facilities and tax relief provided to People of Indian Origin (PIOs).

The DTC, which seeks to modernize the direct taxation system, will replace the Income Tax Act, 1961. The DTC proposes General Anti-Avoidance rule, or GAAR, that allows for examination of the real nature of transaction and invalidates arrangements entered into to avoid tax. Though the government is unlikely to introduce the DTC from April 1, 2012, as planned earlier, it may incorporate some of the provisions of the proposed law in the Budget for 2012-13, to be unveiled on March 16.

The S&P CNX Nifty is currently trading at 5,594.85, higher by 72.90 points or 1.32%. The index has touched a high and a low of 5,606.70 and 5,567.20 respectively.  There were 39 stocks advancing against 11 declines on the index.

The top gainers of the Nifty were BHEL up by 11.72%, IDFC up by 8.62%, Sterlite Industries up by 4.50%, Sesa Goa up by 4.12% and Reliance Power up by 4.11%.

On the flip side, BPCL down by 2.61%, Hero MotoCorp down by 1.76%, Maruti Suzuki down by 1.29%, Bajaj Auto down by 0.92% and Cipla down by 0.89%, were the major losers on the index.

All the Asian equity indices barring Shanghai Composite were trading in the green; Hang Seng up by 0.70%, Jakarta gained 0.50%, KLSE Composite added 0.45%, Nikkei 225 surged 1.55%, Straits Times rose 0.45%, Seoul Composite spurted 1.60% and Taiwan Weighted accumulated 0.52%.

On the flip side, Shanghai Composite down by 0.14% was the lone loser amongst the Asian pack.