Markets edge up after tumbling from higher levels; Nifty at 5,300 level

After falling down into negative territory following good spell in the positive zone this morning, the Indian equity markets edged up a bit on the back of support at lower levels and currently trading marginally higher. The NSE Nifty was moving in a narrow range around 5,300 level, while Sensex up by 50 points. The investors were trading cautiously ahead of fourth quarter earnings, fuel price hike and RBI policy on April 17. On the sectoral front, all were trading in green except oil & gas. However India’s trade deficit for the month of February widened to $15.2 billion during the month from $14.8 billion in January, while exports between April and February grew 21.4 per cent to $267.4 billion. Consumer durables stocks were attracting buyers, while power, capital goods and realty sectors were trading firm. On the global front, Asian markets have gained this morning, as surprisingly firm Chinese manufacturing data dispelled fears of a hard landing in the world's second biggest economy, but caution capped prices before US and European factory data.  Back home, the market breadth favoring the positive trend; there were 1,669 shares on the gaining side against 672 shares on the losing side while 81 shares remained unchanged.

The BSE Sensex is currently trading up by 53.22 points or 0.31% at 17,457.42. The index has touched a high and a low of 17,487.97 and 17,382.38 respectively. There were 20 stocks advancing against 10 declines on the index.

The broader indices were outperforming the benchmarks; the BSE Mid cap and small cap indices were up by 0.92% and 1.29% respectively.

The top gaining sectoral indices on the BSE were CD up by 4.04%, Power up by 1.53%, CG up by 1.42%, Realty up by 1.06% and Bankex up by 0.67%. While, Oil & Gas down by 0.21% was the only loser on the sectoral space.

The top gainers on the Sensex were DLF up by 2.16%, NTPC up by 2.09%, L&T up by 1.51%, BHEL up by 1.23% and M&M up by 1.23%.

On the flip side, Bajaj Auto down by 2.20%, Coal India down by 1.54%, Sterlite Industries down by 1.13%, HUL down by 0.71% and RIL down by 0.59% 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 is currently trading at 5,309.05, up by 13.50 points or 0.25%. The index has touched a high and low of 5,315.80 and 5,278.80 respectively. There were 32 stocks advancing against 18 declining on the index.

The top gainers of the Nifty were Reliance Infra up by 3.01%, RPower up by 2.60%, SAIL up by 2.49%, DLF up by 2.30% and NTPC up by 2.24%.

On the other hand, Bajaj Auto down by 2.27%, Ambuja Cement down by 1.60%, Coal India down by 1.57%, Ranbaxy down by 1.51% and ACC down by 1.40% were the major losers on the index.

Most of the Asian equities were trading in green; Jakarta Composite gained 0.73%, Nikkei 225 surged by 0.46%, Straits Times added 0.17%, Seoul Composite surged 0.81% and KLSE Composite rose 0.13%.

On the other hand, Hang Seng declined 0.52% and Taiwan Weighted lost 0.88%.

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