Volatility continued as key benchmark indices trimmed intraday losses in mid-afternoon trade. At 14:24 IST, the barometer index, the S&P BSE Sensex was down 143.66 points or 0.56% at 25,628.87. The losses for the Nifty 50 index were lower than the losses for the Sensex in percentage terms. The Nifty was down 31 points or 0.39% at 7,856.80. 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. 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, European shares slipped as some weak earnings pushed the market lower after two previous days of gains. 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, 1,475 shares fell and 979 shares rose. A total of 149 shares were unchanged. The BSE Mid-Cap index was currently up 0.19%, outperforming the Sensex. The BSE Small-Cap index was currently down 0.06%. The decline in this index was lower than the Sensex's decline in percentage terms.
Kotak Mahindra Bank rose 0.97% after the bank announced strong Q4 results. The bank's net profit rose 31.99% to Rs 695.78 crore on 52.26% rise in total income to Rs 4947.32 crore in Q4 March 2016 over Q4 March 2015. The results are not comparable due to merger of ING Vysya Bank with Kotak Mahindra Bank, which took effect from 1 April 2015.
Yes Bank rose 0.72% to Rs 956.45. The stock hit high of Rs 962 in intraday trade, which is also a record high for the stock. The stock hit low of Rs 931.50 so far during the day. Yes Bank is seeking shareholders' nod for raising up to $1 billion from issue of equity shares and other financial instruments or securities convertible into equity shares. The issue will be consummated in one or more tranches as the company's board of directors may in its absolute discretion decide, according to a notice issued to the shareholders of the bank pertaining to the company's annual general meeting to be held on 7 June 2016. The aggregate amount to be raised from the equity issue will be restricted to 15% equity dilution, the bank said in the notice. Yes Bank is also seeking shareholders' nod for an enabling resolution to raise up to Rs 10000 crore from issue of debt securities.
Shares of power generation and power distribution companies edged lower. Torrent Power (down 0.53%), GVK Power & Infrastructure (down 0.46%), NHPC (down 0.01%), Tata Power Company (down 1.52%), Power Grid Corporation of India (down 0.78%), Reliance Infrastructure (down 1.13%) and Reliance Power (down 1.38%) declined. Adani Power rose 0.17%.
NTPC gained 0.39% after the company after market hours yesterday, 10 May 2016, announced the commissioning of a 200 megawatts (MW) solar power project at Anantapuram.
State run coal mining major Coal India dropped 0.61% to Rs 283.45. The stock hit high of Rs 284 and low of Rs 276.25 so far during the day.
Most FMCG stocks gained. GlaxoSmithkline Consumer Healthcare (up 0.26%), Godrej Consumer Products (up 1.9%), Bajaj Corp (up 026%), Marico (up 0.82%), Britannia Industries (up 0.3%), Jyothy Laboratories (up 0.98%), Procter & Gamble Hygiene and Health Care (up 1.36%), Nestle India (up 0.93%), and Dabur India (up 0.4%) gained. Colgate Palmolive India (down 0.24%), Tata Global Beverages (down 0.76%) and Hindustan Unilever (HUL) (down 0.37%) declined.
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