The Indian markets after showing a choppy trade managed a positive close in last session. Today, the start is likely to be nervy, as the long-negotiated amendments to the existing Double Tax Avoidance Convention between India and Mauritius is done and it is not looking good for FIIs, as the new pact to levy capital gains tax on investments coming through Mauritius may put foreign portfolio investors in a fix. Investments from Mauritius and Singapore account for a big chunk of foreign portfolio funds coming into the Indian stock market. Traders will also be concerned with the government stating that drought has affected nearly a quarter of the country's population and has left an impact on over 1.5 lakh villages. Meanwhile, President Pranab Mukherjee has said that India will have to raise its growth rate to 8.5-9 percent annually for the next 15-20 years in order to ensure that poverty is totally eliminated and is not just confined to being alleviated. Some buzz can be seen in auto stocks, as Supreme Court tweaked its April 30 blanket ban to allow diesel-run All India Travel Permit taxis to operate till the expiry of their permits, but made clear that its final objective is a gradual phase-out of diesel taxis from national capital.
There will be lots of important result announcements to keep the markets buzzing. Asian Paints, Kotak Mahindra Bank, Apollo Tyres, Havells India, Indian Bank, OBC, Chambal Fertilisers, OFSS, Oriental Bank, SouthIndian Bank and Quick Heal etc will disclose their quarterly earnings.
The US markets rallied in last session, coming off their lackluster performance of last couple of sessions on a notable rebound by most commodities prices and due to the release of disappointing Chinese trade data, which generated some optimism about further monetary policy stimulus. The Asian markets have made a mixed start and some of the indices are down by about half a percent after moving higher in last session on Chinese inflation figures.
Back home, Indian benchmark indices though managed to extend the uptrend for the second consecutive session but consolidated their position after showcasing the outstanding feat of registering biggest intra-day gains in nearly four weeks on Monday. It turned out to be a rather volatile day of trade as the indices rebounded after drifting to lower levels in the morning session, sustained position build up was witnessed in select index heavyweights and capital goods shares. Sentiments got some support with the report that the Centre's indirect tax mop-up rose 41 per cent in April led by high excise collections, signaling a pick-up in economic activity. Furthermore, India's food grain production too increased marginally to 252.23 million tonnes in the 2015-16 crop year, despite setback due to deficient rainfall and shortage of water in reservoirs. If the estimates hold up, it would imply that the damage to the agrarian economy is less than what had been initially feared; reflecting a degree of resilience of Indian agriculture to a deficit monsoon. However, investors remained cautious with report that higher food and fuel prices probably nudged India's annual inflation up to 5.0 percent in April from 4.83 percent in March, making it harder for the central bank to follow up last month's interest rate cut too swiftly. On the global front, stock markets across the world rose on Tuesday helped by some solid corporate earnings in Europe and a new pledge by Japan. Back home, the benchmark got off to a flat opening with a negative bias despite mostly positive leads from Asian markets, were sentiments remained optimistic in thin trades triggered by a fresh promise of stimulus from Beijing, which helped to counter pessimism over weak trade data from China for April. Finally, the BSE Sensex surged 83.67 points or 0.33% to 25772.53, while the CNX Nifty rose 21.75 points or 0.28% to 7,887.80.
