Indian equities trim gains; trade continues in green

Indian equities trimmed gains but continued its firm trade above neutral line in the late afternoon session. The profit booking at higher levels and subdued trading in European counterparts have led market trim gains. Traders were seen piling up position in Oil & Gas, Auto and Capital Goods sector while selling was witnessed in FMCG sector. In the scrip specific development, Telecom stocks Reliance Communications, Bharti Airtel, Idea Cellular, TTML and MTNL were trading in green after the Union Cabinet on Friday, August 03, 2012, approved reserve price of Rs 14,000 crore for 5 MHz pan India in 1800 MHz band. Industry heavyweight RIL was trading firm with gain of around five percent after the oil and gas major agreed to share KG-D6 accounts with the CAG under the terms of the production sharing contract. SKS Microfinance was seen trading firm in green as the company's net loss narrowed down to Rs 39 crore in the quarter ended June 30. MCX and Financial Technologies India were trading in green as MCX-SX had received approvals from SEBI and RBI to launch currency options.

On the global front, the Asian markets were trading in green while the European markets were trading on a mixed note. The Euro zone debt worries eased a bit at the end of last week amid renewed speculation that the European Central Bank will buy Spanish and Italian government bonds as soon as next month. Besides, the euro zone retail sales rose unexpectedly in June and the UK recorded the slowest growth in its service sector in 19 months in July. On the home turf, the NSE Nifty and BSE Sensex were trading above their psychological 5,250 and 17,400 levels respectively. The market breadth on BSE was positive in the ratio of 1622:1062 while 122 scrips remained unchanged.

The BSE Sensex is currently trading at 17,409.32, up by 211.39 points or 1.23% after touching a high of 17,448.42 and a low of 17,313.05. There were 24 stocks advancing against 6 declines on the index.

The broader indices continued to trade in fine fettle; the BSE Mid cap index and Small cap index was trading higher by 0.73% and 0.94% respectively.

The top gainers on the BSE sectoral space were, Oil & Gas up by 2.91%, Auto up by 1.63%, Capital Goods up by 1.46%, Bankex up by 1.42% and Realty up by 1.37%, while Fast Moving Consumer Goods (FMCG) down by 0.36% was the lone loser on the index.

RIL up by 5.47%, Tata Motors up by 3.76%, GAIL India up by 2.52%, L&T up by 2.01% and Tata Steel up by 1.75% were major gainers on the Sensex, while Dr Reddy’s Lab down by 0.84%, ITC down by 0.64%, Wipro down by 0.49%, TCS down by 0.38% and Coal India down by 0.38% were major losers on the index.

Meanwhile, blaming the current guidelines being subjective and prone to misuse, the Confederation of Indian Industry (CII) has strongly resented the introduction of the controversial General Anti-Avoidance Rules (GAAR) in the current business environment. In the representation on the draft guidelines, which would be submitted to the government on August 7, the apex business chamber opines that this is not the right time to introduce GAAR in the Income Tax Act, and only after the government can assure a transparent, non-corrupt and fair tax administration should GAAR be introduced. Highlighting the need to invite foreign capital into India to bring growth back to our country, the industry body has further suggested GAAR to be deferred to April 1, 2018, if not being completely set aside.

Both foreign as well as domestic investors have been in a tizzy ever since the introduction of GAAR, in mid-March as part of the budget for fiscal 2013. However, the chamber in order to revive investor confidence in India, suggested that GAAR should avoid overriding tax treaties except in rare cases, and only after an independent, high-powered committee constituted for the purpose has given its consent. The industry body also wants adequate safeguards to ensure that GAAR is not used as a tool only for checking tax avoidance & evasion and not collecting additional tax.

In a recent development for fine tuning the controversial GAAR policy, Prime Minister-appointed expert committee initiated the consultation process with various stakeholders to usher in greater clarity and transparency in the draft norms.

Earlier this month, Prime Minister Manmohan Singh appointed a four-member committee headed by noted economist and tax expert Parthasarathi Shome to rework on GAAR. A new panel led former adviser to the finance minister during P Chidambaram’s tenure between 2004 and 2008, will prepare a road map on GAAR by September 30.  The Shome committee after reading and vetting the responses to the draft guidelines that the finance ministry has put out on June 28, will draft second GAAR guidelines by August 31, which would be submitted along with its road map for implementation by the end of September.

The S&P CNX Nifty is currently trading at 5282.70, up by 67.00 points or 1.28% after trading in a range of 5,291.35 and 5,260.85. There were 43 stocks advancing against 7 declines on the index.

The top gainers on the Nifty were Reliance Industries up by 5.58%, Tata Motors up by 3.91%, JP Associates up by 3.14%, Axis Bank up by 2.86% and Reliance Infrastructure up by 2.74%. While, BPCL down by 1.80%, Dr Reddy’s Lab down by 0.92%, ITC down by 0.58%, Wipro down by 0.52% and Coal India down by 0.39% were top losers on the index.

All the Asian indices were trading in green; Kospi Composite Index up 2.01%, Jakarta Composite added 0.31%, Hang Seng index surged 1.69%, Straits Times up by 0.71%, KLSE Composite added 0.22%, Taiwan Weighted shot higher by 0.95%, Nikkei 225 soared 2.00% and Shanghai Composite jumped by 1.04%.

The European markets were trading on a mixed note with, France’s CAC 40 ascending 0.09%, Germany’s DAX added 0.16% and the United Kingdom’s FTSE 100 lost 0.17%.