Benchmarks continue weak trade in late afternoon session

Benchmark indices continue to trade lower in late afternoon session tracking weakness among global peers after strong US inflation numbers and Federal Reserve comments raised fear of rate hike. The rupee which weakened for the fifth day against the dollar also had its bearing on domestic equities. Though, the market added some strength minimizing its losses but recovery attempts failed on lack of any supportive cues. Traders were seen piling position in PSU, Capital Goods and Realty stocks while selling was witnessed in Auto, TECK and Bankex sector stocks. In scrip specific development, Tata Metaliks is locked at upper circuit after the company announced the withdrawal of the scheme of amalgamation of the company and its subsidiary Tata Metaliks DI Pipes with Tata Steel. OCL India was trading in green after the company reported a more than double net profit at Rs 134 crore for the fourth quarter ended March 31, 2016 (Q4FY16), due to higher realization and other income. Tata Communications was trading in green on reports that it will announce its deal to sell Data Centre business soon to Singapore Technology Telecom (ST Telecom). The deal between Tata Communication and ST Telecom may come to a closure today.

On the global front, the Asian markets were trading mostly in red while the European markets traded on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 7,850 and 25,700 levels respectively. The market breadth on BSE was negative in the ratio of 1114:1305 while 168 scrips remained unchanged.

The BSE Sensex is currently trading at 25624.93, down by 148.68 points or 0.58% after trading in a range of 25503.40 and 25697.58. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in green and red; the BSE Mid cap index was down by 0.35%, while Small cap index up by 0.10%.

The gaining sectoral indices on the BSE were PSU up by 0.31%, Capital Goods up by 0.26%, Realty up by 0.18%, Metal up by 0.15% while, Auto down by 1.22%, TECK down by 0.65%, Bankex down by 0.56%, IT down by 0.54%, Power down by 0.42% were the losing indices on BSE.

The top gainers on the Sensex were ONGC up by 1.74%, Lupin up by 1.53%, SBI up by 1.16%, Larsen & Toubro up by 0.61% and Tata Steel up by 0.54%.

On the flip side, Bajaj Auto down by 1.77%, BHEL down by 1.73%, HDFC Bank down by 1.70%, HDFC down by 1.38% and Hero MotoCorp down by 1.33% were the top losers.

Meanwhile, after successfully amending the India-Mauritius tax treaty, India will soon amend the Avoidance of Double Tax agreement with Singapore. The Indian officials are in the process of reaching out to the Singaporean authorities for the amendment. The changes to India-Mauritius Double Taxation Avoidance Convention last week has put the focus on a similar treaty inked between India and Singapore in 2005.

Once the amendment is done, Singapore will likely get the same two-year transition benefit of 50 per cent capital gains tax like in the case of Mauritius. Finance Minister Arun Jaitley has said that Singapore is a separate sovereign state and the Mauritius treaty does not automatically extend. The principles will have to be applied, but applied through a process of renegotiation.

Article 6 of the Protocol dated July 18, 2005 to the Singapore Tax Treaty provides that the benefits such as capital gains exemption under the Singapore Tax Treaty would remain in force only till the time Mauritius Tax Treaty provides for capital gains exemption on alienation of shares. Accordingly, the benefits accorded under the Singapore Tax Treaty in this regard would fall away, unless amended.

However, given that the Mauritius Tax Treaty benefits on alienation of shares would be available until March 31, 2017, even the Singapore Tax Treaty benefits for similar transfers should be available until March 31, 2017. Like the Mauritius amendments, which leave out instruments other than shares, even the Singapore treaty changes are likely to stick to shares.

The CNX Nifty is currently trading at 7843.15, down by 47.60 points or 0.60% after trading in a range of 7810.75 and 7867.00. There were 10 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were ONGC up by 1.74%, Lupin up by 1.55%, SBI up by 1.13%, HCL Tech up by 0.85% and Larsen & Toubro up by 0.84%.

On the flip side, Bosch down by 2.49%, Zee Entertainment down by 2.45%, Hero MotoCorp down by 1.75%, BHEL down by 1.74% and HDFC Bank down by 1.66% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 292.39 points or 1.45% to 19,826.41, Shanghai Composite decreased 36.17 points or 1.27% to 2,807.51, KOSPI Index decreased 11.33 points or 0.58% to 1,956.73 and Nikkei 225 decreased 8.11 points or 0.05% to 16,644.69.

On the other hand, FTSE Bursa Malaysia KLCI increased 3.08 points or 0.19% to 1,636.47, Jakarta Composite increased 10.04 points or 0.21% to 4,739.20 and Taiwan Weighted increased 19.2 points or 0.24% to 8,159.68.

The European markets were trading in red; UK’s FTSE 100 decreased 37.7 points or 0.61% to 6,130.07, Germany’s DAX decreased 36.29 points or 0.37% to 9,853.90 and France’s CAC decreased 21.41 points or 0.5% to 4,276.16.