Stung by GAAR & rupee, markets look to govt for balm

All eyes will be on Finance Bill debate in Parliament, starting Monday, with investors looking for the much-needed clarity on GAAR which could push up the market from its current three-month low levels, say analysts.

"Markets are watching out for the GAAR notification next week and corporate results. Also depending on the GAAR notification on May 7, market will set its course," Alex Mathews Head Research Geojit BNP Paribas said.

Further clarity on General Anti-Avoidance Rules (GAAR) and reforms initiatives from the Government will be the pre-requisite for the markets to move up sustainably, said Dipen Shah, Head of Fundamental Research, Kotak Securities.

Lack of clarity on GAAR, which will tax capital flows routed via tax havens, has dampened the market sentiment of FIIs -- one of the most influential stock market forces.

This coupled with a strong depreciation of rupee and fundamental weakness in economy have pulled down markets. The government statement that it is considering a review of the tax treaty with Mauritius has further intensified the bearish mood, pulling Sensex to 16,831.08.

After pouring hefty funds into the Indian equity market in

the first three months of the year, overseas investors turned bearish in April and pulled out over Rs 1,100 crore -- the first instance of monthly net outflows by FIIs since November 2011.

The NSE's 50-share Nifty also plunged by 122.15 points, or 2.34% on Friday to settle at 5,086.85.

"The market sentiment is negative at present as Nifty has breached some crucial levels. Unless and until there is clarity on GAAR market may see some more selling pressure," said Rajesh Jain EVP Retail Research Religare Securities said.

According to marketmen, the sharp depreciation of the rupee over last couple of weeks is also taking a heavy toll on trading sentiment.  The rupee had on Friday ended at 53.47/48, its more-than four-month low, down six paise against the US currency.

Investors will also keep an eye out for companies that will reveal January-March quarter earnings this week.

"Next week results of ABB, Glaxo, HDFC, Andhra Bank, Asian Paints, Kotak Bank, Ranbaxy, Cipla and Lupin are due, which could influence the short term trend of the market," said Shanu Goel, Senior Research Analyst, Bonanza Portfolio.

Markets in the US had also ended with losses which may also lead to a weak opening at the domestic bourses, experts said.