Benchmarks trade in green; hold early gains

Indian equities continued to trade in fine fettle in the late morning session, cautiously extending gains for the second straight session on sustained buying by funds. Sentiments got some support from firming trend on other Asian bourses after US markets closed at record high on Tuesday amid signs of continuing economic recovery and globally accommodative monetary conditions. On the global front, all the Asian equity indices were trading in the green terrain in late morning trade after New York’s Dow Jones share index hit a record high. The sentiments remained buoyed on hopes of central bank's attempt to revive economic growth by pumping cash into the financial system. Japanese benchmark Nikkei gained the most with over one and a half percent.

Back home, the traders were seen piling up positions in Realty, Capital Goods and Metal, while selling was seen in FMCG. Domestic sentiment was also boosted after Finance Minister P. Chidambaram said that the Government will soon announce more measures to boost the economic growth. In scrip specific development, Telecom stocks like Idea cellular and Tata Communication edged higher as the Empowered Group of Ministers (EGoM) headed by Finance Minister P Chidambaram is scheduled to meet today to discuss the third round of spectrum auction. IT stocks rose on positive economic data in the United States, the biggest outsourcing market for the Indian IT firms. In scrip specific actions, Uttam Galva Steels was locked in upper circuit of 5% after the company is planning to raise about Rs 175 crore through placement of shares to fund expansion and augment long term-resources. AstraZeneca Pharma India slumped after its promoter has decided to reduce its stake in the company to meet minimum public shareholding norm.

Meanwhile, the NSE Nifty and BSE Sensex were trading just above their psychological 5800 and 19200 levels respectively. The market breadth on BSE was showing positive trend with advances to declines in ratio of 1346: 627.

The BSE Sensex is currently trading at 19224.33, up by 81.16 points or 0.42% after trading in a range of 19271.58 and 19195.47. There were 19 stocks advancing against 11 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.22% and Small cap index was up by 1.14%.

The top gaining sectoral indices on the BSE were, Realty up by 4.98%, Capital Goods up by 1.62%, Metal up by 1.39%, IT up by 1.16% and PSU up by 1.01% while, FMCG down by 0.47% was the only loser on the BSE.

The top gainers on the Sensex were Wipro up by 2.77%, Sterlite Inds up by 2.32%, L&T up by 2.26%, Hindalco Inds up by 1.98% and Tata Motors up by 1.61%.

On the flip side, Gail India was down by 1.11% ,Hindustan Unilever was down by 1.03%, ITC was down by 0.75%, Mahindra & Mahindra  was down by 0.66%, and Cipla was down by 0.63% were the top losers on the Sensex.

Meanwhile, to address India’s concern on misuse of tax avoidance, Mauritius has promised to tackle all possible misuse of tax treaty between the two countries, while ensuring its commercial viability, on mutually acceptable terms. Mauritius' Ministry of Finance and Economic Development said 'we wish to reiterate that Mauritius is committed and willing to collaborate fully to address the concern of the Indian side on the DTAC (Direct Tax Avoidance Convention), while ensuring that the treaty remains commercially viable.’

Welcoming Indian Finance Minister P Chidambaram's statement clarifying the recent concerns over Tax Residency Certificate (TRC) issue, Mauritius ministry stated that we are optimistic that both the countries can conclude a mutually acceptable package that would yield the solution. It said that Chidambaram’s statement on making TRC 'a necessary but not sufficient' condition to avail of the benefits under double taxation avoidance agreements has created much confusion among investors in India and internationally, including those using Mauritius to do business with India.

Mauritius, which has been often accused of being used as a medium for routing of untaxed funds to and from India, has said that India has acted promptly to clarify the situation regarding the validity of the TRC and the proposed amendment has been interpreted as providing wide powers to the Indian tax authorities to question the TRC produced by a resident of a contracting state. In FY14 Budget, finance minister specified that ‘the TRC produced by a resident of a contracting state will be accepted as evidence that he is a resident of that contracting state and the income tax authorities in India will not go beyond the TRC and question his residence status.’  

Further, it added that a Certificate of Residence delivered by the Mauritian authorities would constitute sufficient evidence for accepting the status of residence as well as beneficial ownership for claiming benefits under Indo-Mauritian, DTAC.  Mauritius has already agreed with India on tax information exchange agreement, which incorporates provisions on assistance in the collection of taxes. The next meeting of the Group is scheduled to take place in the last week of this month, in India.

The CNX Nifty is currently trading at 5,808.95 up by 24.70 points or 0.43% after trading in a range of 5,821.00 and 5,795.05. There were 31 stocks advancing against 18 declines while 1stock remains unchanged on the index.

The top gainers of the Nifty were JP Associate up by 3.47%, DLF up by 3.39%, Wipro up by 2.79%, Reliance Infrastructure up by 2.44% and Cairn up by 2.43%.

On the flip side, Gail down by 1.39%, Hindustan Unilever down by 1.26%, ITC down by 0.96%, Cipla down by 0.72% and M&M down by 0.67%, were the major losers on the index.

All Asian equity indices were trading in the green; Shanghai Composite rose 8.03 points or 0.35% to 2,334.34, Hang Seng surged 186.33 points or 0.83% to 22,756.83, Jakarta Composite strengthened 59.09 points or 1.24% to 4,801.79, KLSE Composite jumped 6.55 points or 0.40% to 1,648.63, Nikkei 225 soared 175.27 points or 1.50% to 11,858.72 Straits Times increased 31.88 points or 0.98% to 3,280.05, KOSPI Composite added 5.20 points or 0.26% to 2,021.81 and Taiwan Weighted was up by 23.02 points or 0.29% to 7,955.42.