New Document top_band
Business Standard

FM defers GAAR markets sigh in relief

Sensex gains nearly 400 points from intra-day low to close at 16,912.71, as traders cut bearish bets

Related News

Indian shares staged a smart recovery on Monday, amid a sea of red in the global markets, after the government deferred by a year implementation of a controversial tax rule that would have hit foreign investors.

Finance Minister told the General Anti-Avoidance Rule () would be delayed to financial year 2013-14, adding the burden of proving tax evasion would lie with the authorities rather than with foreign investors.

The Bombay Stock Exchange benchmark the opened about 210 points lower in the morning, following weak , as election outcome in Greece and France threatened to derail the euro zone’s plan to tackle its debt crisis and weak US jobs data on Friday undermined hopes for global economic growth. The 30-stock index fell to a low of 16,513.77 in afternoon trade, but started recouping its losses after Mukherjee's statement on GAAR, allaying tax-related concerns among foreign institutional investors (). The rebound forced traders to cut their bearish bets, boosting the market recovery.

Major world indices
Asia/Pacific 7-May %chg*
Nifty 5,114.15 0.54
Sensex 16,912.71 0.48
Nikkei 225 9,119.14 -2.78
Hang Seng  20,536.65 -2.61
Taiwan Taiex  7,538.08 -2.11
Kospi  1,956.44 -1.64
Dow Jones  12,905.00 -0.40
Europe/Africa/Middle East#
DAX  6,526.56 -0.53
CAC 40  3,167.29 0.17
Sectoral Indices
  7-May % chg*
Cap Goods 9,253.31 3.87
Power 1,946.86 1.82
Metal 10,728.27 1.57
Cons Durable 6,706.26 1.45
Auto 10,147.43 1.23
Bankex 11,374.31 0.80
Realty 1,639.02 0.68
PSU 6,959.23 0.46
*Change over previous close; ** June Future; #till 5:30 IST
Data compiled by BS Research Bureau

The Sensex finally closed up 81.63 points, or 0.48 per cent, at 16,912.71, gaining nearly 400 points from its . At the National Stock Exchange, the 50-stock Nifty index gained 0.54 per cent, or 27.3 points, to close at 5,114.15, after falling to as low as 4,988.

“The immediate reaction to the deferment of GAAR is one of relief,” said , executive director and head of equity capital markets, Avendus Capital. “However, since its applicability is deferred and not cancelled, the relief will be short-lived. One could perhaps hope by next year the provisions would be substantially diluted or dropped altogether.” 

Inflows from foreign investors in Indian shares have dried up since Mukherjee announced GAAR in the the Budget on March 16. The rule aims to crack down on foreign  investors routing their flows through tax havens like Mauritius to evade tax. Following this, FIIs invested just about Rs 576.9 crore in Indian shares between March 16 and May 4, Securities and Exchange Board of India data compiled by the BS Research Bureau showed. Prior to that, they had net bought shares worth Rs 42,822 crore between January 1 and March 15.

“If the government committee on GAAR comes out with clear guidelines on provisions and implementation of the tax law, it would make the deferment meaningful for FIIs. The time gap between implementation of GAAR will help FIIs take a proper investment decision.” said , partner (tax and regulatory services), Ernst & Young.

Among the major gainers in the Sensex, BHEL surged 6.12 per cent to Rs 227.2, L&T rose 4.79 per cent to Rs 1,202.9 and DLF added 4.34 per cent at Rs 189.75.

On the BSE, the Capital goods index rose 3.87 per cent, while the power index advanced 1.82 per cent.

Market breadth was slightly in favour of gainers with 1,440 stocks advancing from their previous close on the BSE compared with 1,270 stocks that declined.

India was the best performing market in Asia today. Japan’s Nikkei 225 fell 2.78 per cent, Singapore’s Straits Times declined 2.2 per cent, Taiwan’s Taiex gave up 2.1 per cent and China’s Shanghai Composite ended flat.

Read more on:   

Read More

Agri Min proposes Rs 170/quintal hike in paddy MSP

In view of rising farm input costs, the Agriculture Ministry has proposed a Rs 170 per quintal increase in the minimum support price (MSP) of paddy ...

Quick Links


Market News

Markets extend gains in late trades; Sensex tops 26,000

Markets firmed up in late trades and the Sensex topped 26,000 led by telecom shares and RIL

Singapore Exchange opens India office to attract listings

The exchange has experienced a sharp drop-off in listings this year

Thermax tanks over 10% on disappointing Q1 results

Q1 consolidated net profit more-than-halved at Rs 17 crore against Rs 53 crore, due to lower operational income.

Is the HDFC Bank dream run over?

Analysts estimate limited downside risk from current levels, though valuation expansion or earnings surprises look unlikely.

Over 250 stocks hits 52-week highs; Tata Motors, Sun Pharma, Lupin hit record highs

Tata Motors, Sun Pharma, Lupin, Asian Paints, Atul Limited, Page Industries and Alembic Pharma from BSE-500 index hits record high.

Back to Top