Stock markets in India have sustained their northbound journey for the sixth straight session on Monday as the frontline equity indices traded with notable gains of about a percent. The benchmark gauges which amassed the highest weekly gains in calendar year 2012 last week have managed to sail past the important psychological 5,100 (Nifty) and 16,850 (Sensex) levels. After getting off to a gap-up opening, the markets seldom showed any signs of capitulation but oscillated in a narrow range after hitting the day's highs. Sentiments got bolstered by encouraging over the weekend cues from both sides of Atlantic. On one hand, the US markets surged to make their best week of gains in the year as apart from the encouraging US trade data, US President Barack Obama's statement that European leaders need to act to resolve the region's financial crisis, supported market sentiments. On the other hand, investors also cheered European Union's decision to provide a loan of up to 100 billion euros ($125 billion) for distressed Spanish banks. Markets across the Asian markets rallied fervently while the European markets too got off to a solid start as major equity indices there traded with significant gains of close to two percent. On the domestic front, the cues from money markets started to look worrisome in afternoon trades as the rupee which appreciated sharply in morning trades had pared almost all the gains. Meanwhile, power producing majors like Tata Power, Adani Power, JSW Energy and Reliance Infra rallied sharply in the session amid reports that power projects using imported coal could be allowed to hike tariffs by up to Re 1 per unit to counter the effect of increase in fuel price due to additional taxes or changes in law by the governments of source nations. On the BSE sectoral space, the Consumer Durables counter witnessed hefty buying interests as it surged over two and half a percent and remained the top gainer in the space. The rate sensitive Realty sector too traded with notable gains of over two percent. Though largely across the board position build up was evident, investors exerted some selling pressure on the defensive Healthcare pocket which traded with around half a percent losses as majors like Cipla, Sun Pharma and Dr Reddy's slipped lower.
Moreover, the broader markets continued to trade on a strong note with hefty gains of over a percent, performing slightly better than their larger peers. The bourses climbed on good volumes of over Rs 0.6 lakh crore while the market breadth on BSE was in favor of advances in the ratio of 1629:796 while 114 scrips remained unchanged.
The BSE Sensex is currently trading at 16,866.65 up by 147.78 points or 0.88% after trading as high as 16,893.81 and as low as 16,804.89. There were 26 stocks advancing against 4 declines on the index.
The broader indices were trading on a strong note; the BSE Mid cap index surged 1.14% and Small cap index soared 1.26%.
On the BSE sectoral space, Consumer Durables up 2.53%, Realty up 2.01%, Power up 1.85%, Metal up 1.74% and Bankex up 1.22% were the major gainers, while Healthcare down 0.46% was the only laggard in the space.
Sterlite up 4.57%, Tata Power up 3.98%, Bajaj Auto up 2.63%, Coal India up 2.53% and Hindalco up 1.70% were the major gainers on the Sensex, while Cipla down 1.03%, Sun Pharma down 0.57%, ONGC down 0.29% and Dr Reddy's down 0.21% were the only losers in the index.
Meanwhile, Indian markets are estimated to have lost around Rs 1 lakh crore or about $20 billion worth of investments from the overseas funds and ultra-rich foreign individuals over a period of less than three months on new taxation proposals and the government's recent white paper on Black Money. General Anti-Avoidance Rule (GAAR) remained the buzzword over last three months in the financial circles and though not many knew about the nitty-gritty's of it, most witnessed how talks surrounding its implementation from April 1, 2012 rattled foreign institutional investors (FII) which in turn triggered a free-fall off sorts in Indian stock markets.
Foreign investors, who mostly invested through P-Notes (participatory notes) in the Indian markets either pared their exposure to the Indian securities or deferred their investments ever since India proposed GAAR, a new tax policy late in March 2012. According Securities and Exchange Board of India's (SEBI) recent data, around Rs 1,30,012 crore or $25 billion worth of investments in Indian markets were done using PNs at the end of April 2012, which declined sharply from Rs 1,83,151 crore at the end of February and Rs 1,65,832 crore as on March 31, 2012. The PNs' share in total FII holding remained at 16.4 percent in February, which plunged to 11.4 percent by April.
The amount of investment through these PNs has dropped further in recent months and hit its rock-bottom levels of just about 10 percent of total FII holdings which a few years ago accounted for nearly 50 percent of all foreign institutional investment (FII) held in India. High Net worth individuals (HNIs) outside of India frequently used PNs to make investment into India's markets as it did not mandate them to register their details with market regulator SEBI and also saved their time and money, leading to money laundering and tax evasion.
In an attempt to erase the thin line between tax avoidance and tax evasion and to bring both of them under the purview of taxing statute in India, the government in its direct tax code (DTC) proposed to introduce GAAR. GAAR generally empowers the tax authorities to deny the tax benefits of transactions or arrangements which do not have any commercial substance or consideration other than achieving the tax benefit. However, on May 7, 2012, Finance Minister Pranab Mukherjee surrendered to the unrelenting pressure from stakeholders affected by his stringent budget proposals and deferred by one year the adoption of the "General Anti-Avoidance Rules" guidelines designed to curb tax evasion.
The S&P CNX Nifty is currently trading at 5,118.65, higher by 50.30 points or 0.99% after trading as high as 5,124.45 and as low as 5,095.35. There were 46 stocks advancing against 4 declines on the index.
The top gainers on the Nifty were Sterlite up 4.67%, Tata Power up 3.87%, JP Associates up 3.81%, R Infra up 3.81% and BPCL up 2.98%.
HCL Tech down 1.54%, Cipla down 1.18%, Sun Pharma down 0.69% and Ambuja down 0.13% were the only losers on the index.
In the Asian space, Shanghai Composite surged 0.94%, Hang Seng jumped 2.26%, Jakarta Composite climbed 0.95%, KLSE Composite advanced 0.57%, Nikkei 225 soared 1.69%, Straits Times Index ascended 1.54%, KOSPI Composite Index garnered 1.71% and Taiwan Weighted accumulated 1.72%.
The European markets got off to a solid start as France's CAC 40 jumped 1.95%, Germany's DAX surged 2.27% and the United Kingdom's FTSE 100 soared 1.80%.
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