Indian equities add gains to continue firm trade

Indian equities added gains to continue firm trade above neutral line in the late afternoon session on the back of buying in frontline counters and taking clues from European counterparts, on expectation that ECB will unveil new tactics to cut high borrowing costs for indebted euro zone states. Traders were seen piling up position in IT, TECk and Bankex sector while selling was witnessed in FMCG, Consumer Durables and Capital Goods sector. Auto stocks were mostly trading weak on reports that the government is planning to raise fuel prices after the monsoon parliament session ends on September 07. In the scrip specific development, Maruti Suzuki India is seen trading firm in green on company’s expectation that it’s riot-hit Manesar facility will start making full production by end of September. Yes Bank was trading in green after Macquarie upgraded the bank to outperform from neutral and raised its target price. Exide Industries was trading in green on reports that the company has won 15-year trademark spat against global battery giant Exide Technologies. Deccan Chronicle Holdings which is currently in a financial mess was seen locked in lower circuit limit after it issued a tender notice inviting bids from prospective buyers for its IPL franchisee Deccan Chargers. The stock market will remain open for short duration of one and half hour on Saturday i.e. September 08, 2012, as BSE is testing its disaster recovery site. The trading will begin at 11:15 IST and end at 12:45 IST.

On the global front, the Asian markets were trading mostly in green while the European markets were trading on optimistic note. Investors are expecting Mario Draghi to announce the details of a new bond-buying program for euro-area governments that agree to certain terms. The program will involve unlimited purchases of bonds, which will be sterilized to ease concerns about printing money. Besides, the economic downturn in the euro zone continued in August, as the output shrank for the seventh month in the euro zone and contracted in Germany, France, Italy and Spain. On the home turf, the NSE Nifty and BSE Sensex were trading above their psychological 5,200 and 17,300 levels respectively. The market breadth on BSE was positive in the ratio of 1450:1169 while 156 scrips remain unchanged.

The BSE Sensex is currently trading at 17,390.71, up by 77.37 points or 0.45% after touching a high of 17,405.81 and low of 17,294.74. There were 19 stocks advancing against 11 declines on the index.

The broader indices were trading in green; the BSE Mid cap and Small cap indices were trading higher by 0.59% and 0.36% respectively.

The top gainers on the BSE sectoral space were, IT up by 2.57%, TECk up by 1.93%, Bankex up by 0.88%, Metal up by 0.85% and Realty up by 0.70%. While FMCG down by 1.45%, Consumer Durables down by 0.25% and Capital Goods down by 0.09% were the only losers on the sectoral space.

The top gainers on the Sensex were Wipro up by 4.09%, Infosys up by 3.61%, Jindal Steel up by 2.53%, ICICI Bank up by 2.06% and Gail India up by 1.99%. On the flip side, BHEL down by 2.88%, ITC down by 2.28%, Bharti Airtel down by 1.88%, HUL down by 0.92% and Hero MotoCorp down by 0.57% were the top losers on the Sensex. 

Meanwhile, the government of India has confirmed its proposal to review the India-Mauritius Double Taxation Avoidance Convention (DTAC) bilaterally to put in place adequate safeguards to prevent misuse of DTAC and also to strengthen tax information exchange mechanism between the two countries. A Joint Working Group (JWG) comprising members from the Government of India and the Government of Mauritius has already conducted eight rounds of discussions for finding mutually acceptable solution for addressing the concerns.

The prevailing DTAC between India and Mauritius was notified in 1983. As per that, taxation of capital gains arising from alienation of shares is provided only in the residence country of the investor. Under the domestic laws of Mauritius the capital gains within the country is fully exempted from taxation. Hence, an investor routing his investment through Mauritius into India does not have to pay capital gains tax either in India or Mauritius.

This has made Mauritius an attractive route for investment by the third country residents into India through treaty abuse.

The S&P CNX Nifty is currently trading at 5,246.30, up by 20.60 points or 0.39% after trading in a range of 5,254.55 and 5,217.65. There were 33 stocks advancing against 17 declines on the index.

The top gainers of the Nifty were Ambuja Cements up by 4.88%, Wipro up by 3.89%, Infosys up by 3.59%, ACC up by 2.49% and Jindal Steel up by 2.38%. On the flip side, BHEL down by 2.70%, ITC down by 2.43%, IDFC down by 2.42%, Bharti Airtel down by 1.84% and Power Grid down by 1.79% were the major losers on the index.

Most of the Asian indices were trading in green; Nikkei 225 edged higher by 0.01%, Hang Seng index advanced 0.34%, Shanghai Composite added 0.70%, Kospi Composite Index jumped higher by 0.38% and Jakarta Composite rose 0.17% were the gainers. On the flip side, Taiwan Weighted declined by 0.55%, Straits Times lowered by 0.16% and KLSE Composite plunged 1.51%.

The European markets were trading in green with, France’s CAC 40 ascended 1.03%, Germany’s DAX added 1.39% and the United Kingdom’s FTSE 100 gained 0.77%.