Benchmarks make positive opening on Wednesday

After a big fall in last session, Indian equity markets made a positive start and are now trading in fine fettle with gains of over a quarter percent, on value buying activities by market-participants at lower levels. Sentiment on street turned positive as the government accepted the recommendations of A P Shah-led panel that minimum alternate tax (MAT) is not applicable to foreign institutional investors (FIIs). The committee has recommended that Section 115JB of the Income Tax Act may be amended to clarify the inapplicability of MAT provisions to FIIs/FPIs.  Rupee opened higher against the dollar on Wednesday and was trading at 66.14, up 8 paise at the Interbank Foreign Exchange, on increased selling of the American currency by exporters and banks, too kept supporting the markets. Further, traders were getting some encouragement with the statement of Chief Economic Adviser (CEA) Arvind Subramanian that slowdown in China is a historic opportunity for India as Chinese production becomes less profitable. India is a net importer country accordingly Chinese slowdown is an opportunity to relaunch growth in India. However, gains remained capped on reports that foreign portfolio investors (FPIs) sold shares worth a net Rs 675.32 crore on September 1, 2015, as per provisional data released by the stock exchanges.

In the scrip specific development,  DLF was trading higher after real estate developer establish joint venture (JV) with GIC, Singapore’s sovereign wealth fund to develop two projects in Central Delhi.

On the global front, US markets ended lower as renewed concerns about China's economy pushing major indexes down by almost 3 per cent intensifying concerns of slowdown in global growth. Most of the Asian markets have recovered and were trading with modest gains.

Closer home traders were seen piling up position in Realty, FMCG, TECK, IT and Capital Goods, while selling was witnessed in Metal, Oil & Gas, PSU, Auto and INFRA. The market breadth on BSE was positive in the ratio of 1052:551 while 56 scrips remained unchanged. 

The BSE Sensex is currently trading at 25778.73, up by 82.29 points or 0.32% after trading in a range of 25689.07 and 25939.37. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.34%, while Small cap index added 0.68%.

The top gaining sectoral indices on the BSE were Realty up by 1.68%, FMCG up by 1.23%, TECK up by 0.68%, IT up by 0.67% and Capital Goods up by 0.26%, while Metal down by 0.34%, Oil & Gas down by 0.27%, PSU down by 0.22%, Auto down by 0.14% and INFRA down by 0.03% were the losing indices on BSE.

The top gainers on the Sensex were ITC up by 1.76%, Lupin up by 1.69%, TCS up by 1.22%, Reliance Industries up by 0.93% and Sun Pharma Inds. up by 0.80%. On the flip side, Hero MotoCorp down by 1.97%, ONGC down by 1.77%, Vedanta down by 1.63%, GAIL India down by 1.52% and Tata Steel down by 0.90% were the top losers.

Meanwhile, amid the market slump and exodus of the foreign funds from the country, the government giving much needed relief has accepted the recommendations of A P Shah-led panel that minimum alternate tax (MAT) is not applicable to foreign institutional investors (FIIs), a move which is expected to boost investor confidence and help sentiment in the financial markets after FIIs pulled out more than Rs 17,555 crore ($2.65 billion) from India during August.

Finance Minister Arun Jaitley said that the government has decided to waive the controversial minimum alternate tax (MAT) on capital gains made by Foreign Institutional Investors, (FIIs) prior to April 1, 2015. He added that “The Justice A.P. Shah Committee has said that there is no legal basis for levying 20 per cent MAT on past capital gains …. it is not leviable.” The Income Tax department has slapped notices on 68 FIIs demanding MAT dues of Rs 602.83 crore for previous years to April 1, 2015.

The Justice Shah panel which was appointed by the government to go into the question of levy of MAT on capital gains made by FIIs, in its report has said that castleton ruling was completely wrong and that the domestic legislation failed to specify any method for taxing book profits of FIIs/FPIs. It further added that taxing foreign income in the company's book profits would be contrary to the principle of territorial nexus. The report, however, left out from its scope MAT on foreign companies having private equity (PE) in India.Government has stated that the AP Shah committee has recommended that section 115JB of the Income-tax Act may be amended to clarify the inapplicability of MAT provisions to FIIs/FPIs. Alternatively, the committee has suggested that a circular may be issued clarifying the inapplicability of MAT provisions to FIIs/FPIs.

The CNX Nifty is currently trading at 7811.75, up by 25.90 points or 0.33% after trading in a range of 7779.10 and 7862.55. There were 27 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Ambuja Cement up by 2.05%, ITC up by 1.92%, Lupin up by 1.69%, ACC up by 1.56% and Ultratech Cement up by 1.37%. On the flip side, Cairn India down by 2.61%, Hero MotoCorp down by 2.12%, ONGC down by 1.88%, Kotak Mahindra Bank down by 1.43% and Indusind Bank down by 1.26% were the top losers.

Asian markets were trading mostly in green; KOSPI Index increased 2.13 points or 0.11% to 1,916.36, Shanghai Composite increased 9.71 points or 0.31% to 3,176.34, Straits Times increased 16.8 points or 0.58% to 2,899.57, Taiwan Weighted increased 35 points or 0.44% to 8,052.56 and Nikkei 225 increased 284.01 points or 1.56% to 18,449.70

On the flip side, Hang Seng decreased 107.31 points or 0.51% to 21,078.12, FTSE Bursa Malaysia KLCI decreased 18.13 points or 1.13% to 1,591.08 and Jakarta Composite decreased 1.57 points or 0.04% to 4,410.89.