RALLY CONTINUES

The trade at Dalal Street remained in raptures, as bourses rallying over sixth consecutive session, accumulated 3 /4 of points in light of encouraging global leads, which spurred optimism across the board. Although, benchmarks retracted from days' high point, but the accumulated gains of the bourses, were enough to sustain investor's exhilaration. 30 share index, Sensex, after appearing strikingly close to 16900 level, was currently oscillating near the 16850 mark. Similarly, the 50 share index, Nifty, too was hovering above the 5100 crucial level.

Euro 100 billion Spain bailout to shore up its teetering banks thrilled investors' to bits, as this development besides spurring best weekly gains of the year in the US markets, also firmed up Asia pacific equities. The US future indices too were showing an uptick in the screen trade.

Closer home, weakness crept in defensive Health Care counter, however, stocks from Consumer Durable, Power and Realty counters remained the star performers on the BSE sectoral front. Recovery of rupee also did a lot of good to the bourses, after the beleaguered currency appreciated by 32 paise against the American currency. Meanwhile, broader indices also gathered significant gain to outperform the frontline indices. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1476: 605, while 101 shares remained unchanged.

The BSE Sensex is currently trading at 16,850.08, up by 131.21 points or 0.78%. The index has touched a high and low of 16,893.81 and 16,804.89 respectively.   There were 26 stocks advancing against only 3 declines while one stock remained unchanged on the index.

The broader indices too were trading on firm note; the BSE Mid cap and Small cap indices rose 0.94% and 1.17% respectively.

The top gaining sectoral indices on the BSE were, CD up by 2.44%, Power up by 1.77%, Realty up by 1.72%, Metal up by 1.67% and Bankex up by 1.33%. On the flip side, only Health Care, index was trading lower by 0.18%.

The top gainers on the Sensex were Sterlite Industries up by 3.88%, Tata Power up by 3.61%, Bajaj Auto up by 2.11%, ICICI Bank up by 1.91% and GAIL India up by 1.58%. While, Cipla down by 0.55%, ONGC down by 0.29% and TCS down by 0.17% remained the few losers on the Sensex.

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 5,111.40, higher by 43.05 points or 0.85%. The index has touched a high and low of 5,124.45 and 5,095.35 respectively. There were 45 stocks advancing against 5 declines on the index.

The top gainers of the Nifty were Sterlite Industries up by 3.93%, JP Associates up by 3.66%, Reliance Infra up by 3.46%, Tata Power up by 3.39% and Bajaj Auto up by 2.45%.

On the flip side, HCL Tech down by 1.02%, Cipla down by 0.57%, TCS down by 0.11%, Ranbaxy down by 0.05% and ONGC down by 0.02% remained the only losers on the index.

All the Asian equity indices were trading in the green; Shanghai Composite advanced 0.32%, Hang Seng Index jumped 2.31%, Jakarta Composite climbed 0.66%, KLSE Composite advanced 0.61%, Nikkei 225 surged 1.90%, Straits Times Index soared 1.48%, KOSPI Composite Index garnered 1.49% and Taiwan Weighted ascended 1.43%.