Concerns that future equity inflows into India would be hit in the aftermath of amendments to the bilateral India-Mauritius tax treaty weighed on the domestic bourses. At 13:17 IST, the barometer index, the S&P BSE Sensex was down 212.11 points or 0.82% at 25,560.42. The losses for the Nifty 50 index were lower than the losses for the Sensex in percentage terms. The Nifty was down 57.35 points or 0.73% at 7,832. The Sensex and the Nifty extended losses in afternoon trade as European stocks dropped. As per the amendments to the bilateral India-Mauritius tax announced by India's finance ministry after trading hours yesterday, 10 May 2016, with effect from 1 April 2017 capital gains tax will be levied on sale of shares in India from a resident of Mauritius. Mauritius is the top source of foreign funds into India.
There will be a benefit of 50% reduction in the capital gains tax rate during the transition period from 1 April 2017 to 31 March 2019 subject to the Limitation of Benefits Article, whereby a resident of Mauritius (including a shell/conduit company) will not be entitled to the benefit of 50% reduction in tax rate if it fails the main purpose test and bonafide business test. A resident is deemed to be a shell/ conduit company, if its total expenditure on operations in Mauritius is less than Rs 27 lakh (Mauritian Rupees 1,500,000) in the immediately preceding 12 months. Taxation in India at full domestic tax rate will take place from financial year 2019-20 onwards.
In overseas stock markets, energy producers led decline in European stocks as crude oil prices fell. Asian stocks witnessed a mixed trend. US stocks registered broad based gains yesterday, 10 May 2016, as oil prices rallied.
Closer home, the market breadth indicating the overall health of the market was weak. On BSE, 1,489 shares fell and 830 shares rose. A total of 149 shares were unchanged. The BSE Mid-Cap index was currently down 0.08%. The BSE Small-Cap index was currently down 0.29%. The losses for both these indices were lower than the Sensex's decline in percentage terms.
Tata Motors dropped in volatile trade after announcing monthly global sales volume data. The stock was off 1.52% at Rs 383. The stock hit a high of Rs 391.90 and a low of Rs 376.05 so far during the day. The company after market hours yesterday, 10 May 2016, announced that its global wholesales including Jaguar Land Rover rose 5% to 81,333 units in April 2016 over April 2015. Global wholesales of all Tata Motors' commercial vehicles and Tata Daewoo range rose 11% to 29,584 units in April 2016 over April 2015. Global wholesales of all passenger vehicles rose 1% to 51,749 units in April 2016 over April 2015.
Oriental Bank of Commerce (OBC) declined as sticky loans surged in Q4 March 2016. The stock was off 2.18% at Rs 85.45. The bank's gross non-performing assets (NPAs) stood at Rs 14701.78 crore as on 31 March 2016 as against Rs 11824.90 crore as on 31 December 2015 and Rs 7666.22 crore as on 31 March 2015. The ratio of gross NPAs to gross advances stood at 9.57% as on 31 March 2016 as against 7.75% as on 31 December 2015 and 5.18% as on 31 March 2015. The ratio of net NPAs to net advances stood at 6.7% as on 31 March 2016 as against 4.99% as on 31 December 2015 and 3.34% as on 31 March 2015.
OBC reported a net profit of Rs 21.62 crore in Q4 March 2016 compared with the net loss of Rs 178.44 crore in Q4 March 2015. Total income fell 4.68% to Rs 5451.60 crore in Q4 March 2016 over Q4 March 2015. The result was announced during trading hours today, 11 May 2016.
OBC reported net profit in Q4 March 2016 on the back of tax reversal. The bank reported pre-tax loss of Rs 147.38 crore in Q4 March 2016. There was a tax reversal of Rs 169 crore in Q4 March 2016.
The bank's provisions and contingencies (excluding tax provisions) fell 7.27% to Rs 1026.11 crore in Q4 March 2016 over Q4 March 2015. Provision coverage ratio was at 51.16% as on 31 March 2016.
Aviation stocks declined after sharp surge in global crude oil prices overnight. Jet Airways (India) (down 0.82%) and InterGlobe Aviation (down 0.94%) edged lower. SpiceJet (up 1.17%) rose. Higher crude oil prices hurt aviation firms as jet fuel prices, which typically constitute about 50% of airlines' operating costs, are directly linked to international crude oil prices.
Shares of public sector oil marketing companies (PSU OMCs) declined after sharp surge in global crude oil prices overnight. BPCL (down 1.63%), HPCL (down 1.18%) and Indian Oil Corporation (down 0.57%) edged lower. Higher crude oil prices could increase under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at controlled prices. The government has already freed pricing of petrol and diesel.
Shares of oil exploration and production (E&P) firms edged lower. ONGC (down 1.39%), Oil India (down 0.47%) and Cairn India (down 0.26%) declined.
Index heavyweight Reliance Industries was off 0.57% at Rs 975.75. The stock hit a high of Rs 980.45 and a low of Rs 971 so far during the day.
In the global commodities markets, Brent for July settlement was currently down 38 cents at $45.14 a barrel. The contract had surged $1.89 a barrel or 4.33% to settle at $45.52 a barrel during the previous trading session as supply disruptions in Canada, Nigeria and Libya outweighed concerns about growing US crude stockpiles.
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