Markets stabilize after a flat start; Consumer durables take the lead

Indian markets have made a flat start of the first trading day of the new financial year. Though, after some initial hic-cups the major indices have started moving forward with consumer durables and power stocks providing the maximum impetus along with high beta realty. The global markets were mixed and though the main Chinese market is closed till Wednesday, but the better than expected manufacturing data of the country has given a reason to the other regional markets to move higher. Japanese market too was on way of snapping the three days losing streak. Back on home turf, barring the Fast moving Consumer Goods and Oil & Gas sector all were trading in green. The major disappointment was seen on the PSU oil marketing companies as they met on Saturday on the next round of petrol price hike, but decided to defer the decision, instead the companies asked the Centre to make up for the losses incurred by them while keeping petrol prices lower than the actual cost. However, they have hiked the the ATF prices on March 31 by 3%, the third time in the month. Jet fuel constitutes over 40% of an airline's operating cost and the hike in prices and the burden on them was clearly being reflected on the stock prices with Kingfisher Airlines trading lower by 3.93% and Jet Air down by 0.11%.

The BSE Sensex opened at 17,429.96 about 25 points higher compared to its previous closing of 17,404.20, and has touched a high and a low of 17,487.17 and 17,382.38 respectively.  The index is currently trading at 17,470.18 up by 65.98 points or 0.38%. There were 23 stocks advancing against 7 declines on the index.

The overall market breadth was in the favour of advances with 72.64% stocks advancing against 24.35% declines. The broader indices were outperforming the benchmarks; the BSE Mid cap and small cap indices were up by 0.79% and 0.76% respectively.

The top gaining sectoral indices on the BSE were CD up by 3.36%, Realty up by 1.25%, Power up by 1.24%, CG up by 1.11% and Bankex up by 0.89%. While, FMCG down by 0.14%, and Oil & Gas down by 0.21% were the only losers.

The top gainers on the Sensex were L&T up by 1.43%, Jindal Steel up by 1.38%, Tata Motors up by 1.34%, DLF up by 1.24% and GAIL India up by 1.23%.

On the flip side, Bajaj Auto down by 1.78%, Coal India down by 1.53%, RIL down by 0.57%, HUL down by 0.46% and ITC down by 0.42% were the top losers on the Sensex.

Meanwhile, Finance Minister, Pranab Mukherjee clarified that Participatory notes (P-notes) will not be taxed, but financial investors issuing these P-Notes will be. Also the FM has categorically stated that the government is not interested in taxing genuine investors.

As per Pranab Mukherjee, ‘Indian tax authority would not go beyond financial investor (FIIs) to check the details about the P-Note holders. Accordingly, a question of liability for tax in India of the P-Note holder would not arise. Necessary clarification will be issued’. Further the tax liability of the FIIs will be determined by the Income tax department.

P-Notes are instruments that allow foreign institutional investors (FIIs), which are not registered with market regulator SEBI, to invest in the Indian equity market. The catch is that they offer the buyer anonymity.

The recent Budget proposals under General Anti-avoidance rules (GAAR) were interpreted to mean that the income on P-note is taxable with retrospective effect in India as the income arises due to the sale of an underlying asset, which has its presence in India. If true it would mean that the government would track the down the actual investor in possession of the P-note and tax him. But the recent clarification has laid these fears to rest.

A lack of clarity on taxation of P-notes has contributed to the recent volatility in the domestic share market. However the assurance has now pushed the markets up

The S&P CNX Nifty opened at 5,296.35 almost unchanged to its previous closing of 5,295.55, and has touched a high and a low of 5,315.05 and 5,278.80 respectively. The index is currently trading at 5,308.85, up by 13.30 points or 0.25%. There were 33 stocks advancing against 17 declines on the index.

The top gainers of the Nifty were RPower up by 3.03%, Reliance Infra up by 2.48%, SAIL up by 2.07%, Kotak Bank up by 1.99% and Tata Motors up by 1.56%.

On the other hand, Ranbaxy down by 2.25%, Bajaj Auto down by 1.78%, Coal India down by 1.72%, BPCL down by 1.46% and RIL down by 0.91% were the major losers on the index.

Most of the Asian equities were trading in green; Jakarta Composite was up by 30.35 points or 0.74% to 4,152.04, Nikkei 225 surged by 57.24 points or 0.57% to 10,141.04, Straits Times was up by 5.51 points or 0.18% to 3,016.32, Seoul Composite gained 7.20 points or 0.36% to 2,021.94 and KLSE Composite was up 2.05 points or 0.13% to 1,598.38.

On the other hand, Hang Seng was down 62.85 points or 0.31% to 20,492.73, and Taiwan Weighted was down 45.58 points or 0.57% to 7,887.80.

Shanghai Composite will remain closed till Wednesday for a public holiday and will open on Thursday.