Benchmarks pare gains; Sensex holds above 21000 mark

Indian equities pared gains but continue to trade in green hovering near the lowest point of the day in the late afternoon session. Investors took note of Planning Commission Deputy Chairman Montek Singh Ahluwalia comments that poor economic growth in India in 2013 derailed Planning Commission’s ambitious target of 8% for the 12th Plan, which the nation’s official think-tank will revise downwards to around 7.5% in the new year as part of its mid-term review exercise. Traders were seen piling positions in Power, Consumer Durables and PSU stocks while selling was witnessed in Auto and Health Care sector stocks.  Hectic activity was witnessed in Power stocks after CCEA approved mega power policy, wherein it agreed changes in tapering coal linkage policy. Besides, fertilizer stocks too were upbeat on prospects of hike on fertilizer subsidy on urea. In scrip specific development, Amtek India was trading in green after the company stated that it has entered into an agreement to acquire substantial business interests of Germany based Kuepper Group, through its 100% subsidiaries. The market may remain volatile today as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. December 2013 series to next month i.e. January 2014 series. The near month December 2013 derivatives contract expires today on Thursday, December 26, 2013.

On the global front, the Asian markets were trading mostly in green, while the European markets were shut on account of Christmas holiday. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 6,250 and 21,000 levels respectively. The market breadth on BSE was positive in the ratio of 1550:805 while 126 scrips remained unchanged.

The BSE Sensex is currently trading at 21044.94, up by 12.23 points or 0.06% after trading in a range of 21,108.25 and 21,043.84. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices pared some of its gains; the BSE Mid cap and Small cap indices were trading up by 0.58% and 1.35% respectively.

The gaining sectoral indices on the BSE were Power up by 1.08%, Consumer Durables up by 0.97%, PSU up by 0.92%, Metal up by 0.55% and Capital Goods up by 0.43%. On the other hand, Auto down by 0.26% and Health Care down by 0.05% were the only losing indices on BSE.

The top gainers on the Sensex were Tata Powers up by 2.78%, ONGC up by 2.12%, Axis Bank up by 1.70%, Bharti Airtel up by 1.18% and NTPC up by 1.02%. On the flip side, Hero MotoCorp down by 1.45%, Bajaj Auto down by 1.36%, Tata Motors down by 1.15%, RIL down by 0.85% and Dr. Reddy’s Lab down by 0.60%.

Meanwhile, in order to plug loopholes to allay India's concerns over the misuse of the double taxation avoidance agreement (DTAA), Mauritius has put additional safeguards in place for global business companies operating from its jurisdiction to ensure their substantial presence in the country and to remove using 'proxy address' to benefit from tax treaties with India and other nations.

Mauritius' integrated financial sector regulator (FSC) has stated that despite removing tax benefits for business companies using proxy address, the move will also lead to the creation of more economic nexus between those companies and the economy of the island. The additional requirements being imposed on Global Business Category 1 companies as most global investors use GBC-1 route to make investments into India and other countries through Mauritius.

There have been concerns that Mauritius is being used for money laundering and round tripping of illicit funds as it accounts for almost half of the foreign money coming into India. Out of the $22.42 billion FDI inflow in FY13, India receives $9.49 billion from the Mauritius. The investors from the US, Europe and other places tend to route their capital flows into India through this Indian Ocean country to benefit from a favorable tax treaty and the ease of doing business here. Further, there has also been concern related to Mauritius based entities involved in some cases of corruption and alleged tax evasion, which were suspected to have been set up by Indian entities to dodge the tax authorities in India.

The CNX Nifty is currently trading at 6,276.45, up by 8.05 points or 0.13% after trading in a range of 6,294.55 and 6,270.05. There were 30 stocks advancing against 20 declining on the index.

The top gainers of the Nifty were Tata Power up by 2.96%, ONGC up by 2.34%, BPCL up by 2.34%, Axis Bank up by 1.81% and NMDC up by 1.48%. On the flip side, Ranbaxy down by 1.39%, Bajaj Auto down by 1.38%, Hero Motocorp down by 1.29%, Reliance Industries down by 1.04% and Power Grid down by 0.96% were the major losers on the index.

Most of the Asian equity indices were trading mostly in green; KLSE Composite up by 0.55%, Straits Times up by 0.22%, Nikkei 225 up by 1.03% and Taiwan Weighted up by 0.21% while, Seoul Composite down by 0.11% and Shanghai Composite down by 1.58%. Hong Kong and Indonesian markets remained shut for the trade today on account of Christmas Holidays.

The European markets too remained shut for the trade today on account of Christmas Holidays.