Indian equities continue its lackadaisical trade

Indian equities continued its lackadaisical trade in red below neutral line in the late afternoon session as investors lacked conviction to pile up fresh positions amid uncertain market conditions. The markets traded on a subdued note through the session tracking the mixed cues from Asian peers after disappointing economic reports from world’s largest economy’s recovery and renewed concerns over the financial situation in Euro-zone, which offset the positive cues from encouraging earnings announcement by blue-chip firms. Traders were seen piling up position in Consumer Durables, FMCG and TECk sector while selling was witnessed in Capital Goods, Power and Realty sector. Besides, the sentiments were also grim ahead of the earnings announcement by Sensex’s heaviest component Reliance Industries, which plunged in red amid expectations that the company is likely to report quarterly figures that would disappoint the Street. In the scrip specific development, ACC and Ambuja cement were seen trading weak in red on announcing disappointing quarterly result. SML Isuzu was seen trading firm in green after Reliance Life Insurance Company and Axis Mutual Fund bought the company's shares through bulk deals on the exchange on Thursday, April 19, 2012. MARG is trading firm in green on reports that private equity fund Jacob Ballas will buy stake in the company’s subsidiary Karaikal Port. Escorts’ is seen trading firm in green after promoters shore up stake in the company fearing takeover threat. The promoters of the company have acquired 5% stake in last 2-3 weeks.

On the global front, Asian markets were trading on a mix note while the European markets were too trading on a mix note. On the home turf, the NSE Nifty and BSE Sensex were trading above their psychological 5,300 and 17,400 levels respectively. The market breadth on BSE was neutral in the ratio of 1312:1326 while 128 scrips remained unchanged.

The BSE Sensex is currently trading at 17,491.03 down by 12.68 points or 0.07% after trading as high as 17,519.88 and as low as 17,441.49. There were 15 stocks advancing against 15 declines on the index.

The broader indices were trading on a mixed note; the BSE Mid cap index lost 0.27% while Small cap added 0.22%.

On the BSE sectoral space, Consumer Durables up 0.58%, FMCG up 0.56%, TECk up 0.42%, Auto up 0.42% and IT up 0.32% were the major gainers, while Capital Goods down 1.08%, Power down 0.72%, Realty down 0.72%, Bankex down 0.36% and Oil & Gas down 0.21% were the major laggards in the space.

M&M up 2.61%, Tata Steel up 1.26%, Bharti Airtel up 1.01%, Wipro up 1.01%, and Maruti Suzuki up 0.98% were the major gainers on the Sensex, while Hindalco Industries down 2.07%, BHEL down 1.65%, Tata Power down 1.12%, L&T down 1.05% and ICICI Bank down 1.03% were the major losers in the index.

Meanwhile, the recent amendment of the Income Tax Act, which allows India to tax foreign takeovers retroactively to 1962, has raised concerns in the US corporate sector. US is of the view that such steps dampen enthusiasm about India's investment climate. The US Treasury Secretary Timothy Geithner has reportedly told his Indian counterpart that US businesses have become worried about changes in India's tax regime for foreign companies. Also Washington is examining India's proposed tax provisions to determine how they will impact on the US-India bilateral income tax treaty and overall economic relations.

Timothy has reportedly encouraged Finance Minister Pranab Mukherjee to reassure foreign investors that India will continue to welcome foreign capital. The Finance Minister in this year’s Union Budget came up with a proposal to amend the IT Act with retrospective effect to bring into the tax net Vodafone-type merger and acquisition deals involving assets in India. The UK-based Vodafone, which in 2007 bought Hong Kong-based Hutchison’s telecom business that included Indian assets for around $11 billion, has attracted tax of Rs 11,000 crore.

However, Vodafone has refused to pay the tax arguing that since both companies are not based in India, the tax rule does not apply on them. The Supreme Court has given its judgment in favour of Vodafone. Nevertheless, the amendment to the law itself and the ability of the IT department to tax companies retrospectively has drawn flak from investors domestically and internationally.

In recent months, foreign investors have begun to sour on India due to these major policy swings. In a letter to Premier Manmohan Singh earlier this month, seven global business groups, including the Confederation of British Industry and the US Business Roundtable, warned of a 'widespread reconsideration of the costs and benefits of investing in India.'

The S&P CNX Nifty is currently trading at 5,324.65, lower by 7.75 points or 0.15% after trading as high as 5,336.15 and as low as 5,310.55. There were 24 stocks advancing against 26 declines on the index.

The top gainers on the Nifty were M&M up 2.60%, BPCL up 1.68%, Wipro up 1.45%, Tata Steel up 1.24% and ITC up 1.13%.

ACC down 2.61%, Ambuja Cement down 2.58%, Hindalco Industries down 2.07%, IDFC down 1.99% and JP Associates down 1.68% were the major losers on the index.

In the Asian space, KLSE Composite down 0.16%, Nikkei 225 fell 0.28%, Straits Times dropped 0.26%, Seoul Composite plunged 1.26% and Taiwan Weighted plummeted 1.52%. On the flipside, Shanghai Composite surged 1.19%, Hang Seng added 0.07% and Jakarta Composite rose 0.05%.

The European markets were trading on a mix note with, France’s CAC 40 eased 0.32%, Germany’s DAX advanced 0.56% and Britain’s FTSE 100 added 0.13%.