Post session - Quick review

After remaining choppy on the penultimate day of derivatives contract expiry, barometer gauges concluded lower to settle with a cut of over half a percentage points. Profit booking remained the constant factor of the session after Tuesday’s rally at the bourses. Bears taking a breather in the previous session, only resumed to trade with vigor, which dragged the benchmark indices lower below their respective bastions. Even though the substantial recovery that emerged in the dying hours of trade, failed to negotiate a positive close for Dalal Street, but it pushed bourses out of their intra-day’s low level. Bargain hunting coupled with covering of some pending shorts could be credited for this recuperation. 

Meanwhile, bounce back of UB Group shares on stake sale report, also enhanced the sentiment. Shares of Vijay Mallya promoted UB Group companies such as United Spirits, United Breweries (UBL), United Breweries (Holdings) and Kingfisher Airlines were all in limelight after reports that, Vijay Mallya and Heineken are in final stages of the negotiations and due diligence for UBL stake sale.

However, negative global set up amidst absence of any positive trigger on domestic front, prompted a disappointing close of Dalal Street. Asian stock markets ended mostly lower on Wednesday, in line with losses on Wall Street overnight, as a weaker US consumer confidence reading and declining home prices, albeit at a slower pace in January, tested investor faith in the sustainability of the global economic recovery.

Additionally, European equity markets too weakened on Wednesday as the boost given by speculation over further Federal Reserve monetary easing faded and investors became jittery once again about Spain’s finances.

Back home, losses also came into the equity markets as risk shy investor’s flee on concerns about foreign selling on the back of the uncertainty over the taxation for participatory notes, which are popular derivative instruments through which many overseas investors buy into Indian equities.

Meanwhile, bourses also remained dejected on portfolio positioning by institutional investors ahead of the end of the fiscal year this week. Stocks from Consumer Durable (CD) combined with Banking and Realty counters were the worst hit among 13 sectoral indices. On the flip side, stocks from Fast Moving Consumer Goods (FMCG) and Health Care (HC) counters depicted resilience.

BSE’s Sensex after breaching the 17100 bastion in intra-day’s low reclaimed it to conclude substantially above it. Similarly, NSE’s Nifty-too ended above 5200 psychological level, after falling off it. The broader indices too went home with prominent losses. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 921:1994 while 100 scrips remained unchanged. (Provisional)

The BSE Sensex lost 119.77 points or 0.69% and settled at 17,137.59. The index touched a high and a low of 17,245.82 and 17,040.12 respectively. 8 stocks advanced against 22 declining ones on the index (Provisional)

The BSE Mid-cap index lost 0.95% while Small-cap index was down 1.04%. (Provisional)

On the BSE Sectoral front, FMCG up 0.42% and Health Care up 0.27%were the only gainers while Consumer Durables down 3.45%, Bankex down 1.84%, Realty down 1.55%, PSU down 1.51% and Power down 1.12% were the top losers.

There top gainers on the Sensex were Tata Steel up 2.17%, ITC up 0.84%, Gail India up 0.63%, Coal India up 0.61% and Maruti Suzuki up 0.54% while, Hindalco Industries down 2.83%, ONGC down 2.62%, SBI down 2.43%, Sterllite Industries down 2.28% and ICICI Bank down 2.05% were the top losers in the index. (Provisional)

Meanwhile, clarifying the government’s stand on the controversial General Anti Avoidance Rules (GAAR), the Finance Minister, Pranab Mukherjee said ‘India is not a no-tax country, India has a determined tax rate, but it is not a tax haven ... If you pay tax in your country of origin, you don't have to pay tax, if we have double taxation agreement with your country of origin.’ By adding further he said, GAAR will be examined and modified as and when required, as this is essential for anti-avoidance.

Mukherjee further clarified that the intent of legislature is that there should not be double taxation but no outflow of revenue either. Of late there have been a lot of apprehensions raised over the implementation of GAAR. There were fears that the Participatory Notes - an instrument through which FIIs unregistered with SEBI invest in stock markets, would be taxed. Other concerns were regarding the power given to tax officials to re- open cases retrospectively.

However, the government has come forward and explained that GAAR is not being implemented with a vindictive intent. Also it has not been created to target any class of financial instruments. Moreover there is no room for apprehension as cases beyond six years cannot be re-opened. Provisions of GAAR will be applicable from April 1 and not with retrospective effect.

Defending the government's proposal to amend the Income Tax Act with retrospective effect, the FM stated that double taxation avoidance agreements (DTAAs) are meant for genuine investors who are required to pay in only one of the contracting countries. However, they cannot be used as instruments to avoid taxation.

It may be noted that all benefits which a person is entitled in a DTAA (Double Taxation Avoidance Agreement) treaty can be overruled or denied if GAAR is invoked. The fear of GAAR had spooked stock markets which tanked 2% yesterday on concerns that all short-term capital gains made by FII and P-Note investments would be taxed. The Sensex, however, recovered today rising over 200 points.

In the Union Budget for 2012-13, Mukherjee had said that the government wanted to introduce GAAR in order to ‘counter aggressive tax avoidance schemes, while ensuring that it is used only in appropriate cases, by enabling a review by a GAAR panel.’

India VIX, a gauge for market’s short term expectation of volatility lost 0.71% at 24.87 from its previous close of 25.05 on Tuesday. (Provisional)

The S&P CNX Nifty lost 40.50 points or 0.77% to settle at 5,202.65. The index touched high and low of 5,236.55 and 5,169.60 respectively. 16 stocks advanced against 34 declining ones on the index. (Provisional)

The top gainers on the Nifty were Tata Steel up 2.13%, Siemens up 1.69%, Ranbaxy up 1.56%, Maruti Suzuki up 1.45% and Dr. Reddy’s Lab up 1.37%.On the other hand, JP Associates down 5.23%, Cairn India down 3.97%, Reliance Power down 3.75%, Kotak Bank down 3.21% and SAIL down 3.21% were the top losers. (Provisional)

The European markets were trading in red, with France's CAC 40 down 0.20%, Germany's DAX down 0.21% and Britain’s FTSE 100 down 0.17%.

Most of the Asian equity indices snapped the session in the negative territory on Wednesday after rallying the previous session on hopes for further stimulus from the Federal Reserve. Moreover, investors will be looking for clues from US durable goods orders data for February, due later in the day. Data on Tuesday showed Americans were more worried about inflation in March than at any time in the last 10 months and consumer confidence waned in the wake of higher gasoline prices.

Meanwhile, Chinese Shanghai ended down 2.65 percent, the biggest one-day percentage drop in four months, as weak corporate earnings reports increased worries over the domestic economy. China's industrial firms suffered a rare annual drop in profits in the first two months of 2012 mainly in petrochemicals, metals and auto firms, data showed on March 27, 2012. Moreover Seoul shares fell after putting in their best daily performance in two weeks on March 27, 2012, with investors taking profits in blue chip issues that have recently outperformed the market. While, Tokyo stocks fell 0.71 percent following a weak performance on Wall Street, despite a surge from electronics maker Sharp on a capital deal with Taiwan’s Hon Hai.