Benchmarks add strength; Nifty surpasses 7,750 mark

Indian equity benchmarks added strength in the late afternoon session on account of buying in frontline blue chip counters and taking cues from global counterparts. Traders were seen piling position in FMCG, Power and Auto stocks while selling was witnessed in Oil & Gas, Realty and TECK sector stocks. In scrip specific development, Novartis India was trading firm after the company stated that its board will meet on 26 May to consider share buyback. Monsanto India was trading in green after the government withdrew a notification capping royalty fee for new genetically-modified (GM) seed technology amid opposition from the crop biotech industry. On the other hand, VRL Logistics was locked at lower circuit limit following its promoters’ decision to start a regional airline in their personal capacity. The company’s promoters - Vijay Sankeshwar and Anand Sankeshwar - are planning to incorporate a separate company to start a regional airline for which they would sell a minority stake in VRL Logistics. The market may remain volatile this week as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. May 2016 series to next month i.e. June 2016 series. The near month May 2016 derivatives contracts will expire on Thursday i.e. May 26, 2016.

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 above the psychological 7,750 and 25,300 levels respectively. The market breadth on BSE was negative in the ratio of 801:1553 while 162 scrips remained unchanged.

The BSE Sensex is currently trading at 25309.01, up by 78.65 points or 0.31% after trading in a range of 25181.47 and 25336.44. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.72%, while Small cap index down by 0.65%.

The gaining sectoral indices on the BSE were FMCG up by 0.29%, Power up by 0.24%, Auto up by 0.18%, Consumer Durables up by 0.07%, Bankex up by 0.05% while, Oil & Gas down by 1.17%, Realty down by 1.01%, TECK down by 0.48%, PSU down by 0.47%, IT down by 0.31% were the losing indices on BSE.

The top gainers on the Sensex were NTPC up by 2.62%, Tata Motors up by 1.89%, Reliance Industries up by 1.33%, ICICI Bank up by 1.27% and HDFC up by 0.95%.

On the flip side, Bajaj Auto down by 1.74%, ONGC down by 1.15%, Adani Ports & Special Economic Zone down by 1.13%, Sun Pharma down by 1.07% and TCS down by 0.97% were the top losers.

Meanwhile, in order to avoid tax disputes in future, the Central Board of Direct Taxes (CBDT) has taken the next big step in implementing the controversial ‘indirect transfer’ provisions that has dented India’s image among the foreign investor community which led to international companies face huge tax bills in the country. The department has issued a proposed set of rules for computation of the fair market value (FMV) of assets for taxing any indirect transfer of assets abroad. The FMV calculation is critical as it forms the basis of trigger of ‘indirect transfer’ provisions under the income tax law, say tax experts.

As per the proposal, if the asset is the share of an Indian company listed on a recognised stock exchange, the fair market value of the share will be the price of such a share on the exchange. When the share is listed on more than one recognised exchange, the price on the bourse recording the highest volume of trading will be considered. Furthermore, where the asset is the share of an Indian company not listed on a recognised exchange on the specified date, the FMV will the one determined by a merchant banker or an accountant 'in accordance with any internationally accepted pricing methodology for valuation of shares on arm's length basis and increased by the liability.

Stakeholders and general public have been given time till May 29 to electronically send in their comments and suggestions on the draft rules.

This move comes almost a year after finance minister Arun Jaitley had clarified in the 2015-16 budget that indirect transfer abroad between two companies would draw tax if the value of Indian assets of the company concerned on the specified date exceeded Rs 10 crore and these represented at least 50 per cent of the value of all the assets owned by such a foreign company globally.

The CNX Nifty is currently trading at 7753.00, up by 21.95 points or 0.28% after trading in a range of 7715.80 and 7756.90. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were NTPC up by 2.65%, Tata Motors up by 2.27%, ACC up by 1.77%, Tata Power up by 1.70% and Ultratech Cement up by 1.66%.

On the flip side, Aurobindo Pharma down by 4.05%, Idea Cellular down by 3.90%, BPCL down by 2.83%, Bank of Baroda down by 2.09% and Bajaj Auto down by 2.02% were the top losers.

The Asian markets were trading mostly in red; Nikkei 225 decreased 155.84 points or 0.94% to 16,498.76, Taiwan Weighted decreased 43.78 points or 0.52% to 8,300.66, Jakarta Composite decreased 23.78 points or 0.5% to 4,719.88, Shanghai Composite decreased 21.98 points or 0.77% to 2,821.67, KOSPI Index decreased 17.57 points or 0.9% to 1,937.68 and FTSE Bursa Malaysia KLCI decreased 6.54 points or 0.4% to 1,628.35.

On the other hand, Hang Seng increased 21.4 points or 0.11% to 19,830.43.

The European markets were trading in green; UK’s FTSE 100 increased 31.2 points or 0.51% to 6,167.63, France’s CAC increased 46.64 points or 1.08% to 4,371.74 and Germany’s DAX increased 73.08 points or 0.74% to 9,915.37.