Mauritius tax pact trips 2-day relief rally; Nifty down 39 pts

Indian markets wobbled once again after a fantastic two-day bull run as investors sentiment turned suddenly skeptical and bearish after the government amended its long-standing tax treaty with Mauritius.
The panic unwinding fearing the reworked tax agreement may curb inflows from foreign investors sent the bellwether Nifty index tumbling by 39 points to end at 7,848.85 on the National Stock Exchange here.
India and Mauritius agreed to amend a three-decade old Double Taxation Avoidance agreement to get rights to tax capital gains from investments coming from the tax haven which comes into effect April 1, 2017 and also check misuse by some investors who use a double-taxation avoidance pact between the two nations to escape taxes.

The initial knee-jerk reaction to government's overnight decision pulled down the benchmark indices sharply lower at the opening session witnessing a massive 112 points swing before rebounding smartly to trade in green briefly.
However, the recovery proved to be short-lived as market retreated sharply in afternoon trade as the overall sentiment remained bruised.
Though good low level buying support in heavyweights as well as robust macro fundamentals helped the bourses to cut short losses.

Adding more gloom were European markets, which also opened sharply lower across the board dragged down by Italian banks.
The government will release CPI inflation and IIP data this week.

Meanwhile, other Asian equities ended mixed despite a firm opening as the yen nudged higher against the dollar and oil prices retreated.
The 50-share index resumed with a gap-down at 7,804.65 and fluctuated between 7,893.10 and 7,780.90 before finishing at 7,848.85, a fall of 38.95 points, or 0.49 per cent.
On the sectoral front, Nifty PSU Bank indices fell the most led by heavyweight SBI ahead of its Q4 results, sliding 2.16 per cent. Realty (1.08 per cent), Pharma (0.71 per cent), IT (0.67 per cent), Energy (0.62 per cent), Infra (0.57 per cent), FMCG (0.55 per cent), Auto (0.51 per cent) and Metal (0.09 per cent). Mid-cap and Small-cap also ended lower.

However, Nifty Media index jumped by 4.47 per cent.
Major index losers were ITC, HDFC, Tata Motors, SBI, Infosys, Bharti Infratel, Reliance, HDFC Bank, Bharti Artel, ICICI Bank, Dr Reddys, Eicher, IDEA, HCL-Tech and ONGC.
Key gainers included Zee, Axis Bank, Bosch, Kotak, L&T, Maruti, Asian Paints, Ultratechcem, Grasim and Yes Bank.
Turnover in cash segment rose to Rs 17,796.14 crore compared to Rs 16,384.07 crore on Tuesday.
A total of 9,850.65 lakh shares changed hands in 73,92,168 trades. The market capitalisation of the NSE stood at Rs 94,91,732 crore.