Markets hold on to their gains supported by surge in IT, Tech and CG stocks

Domestic markets have slowly started picking up pace in the late morning session and are at the high points of the day supported by broad based buying. Though, the broader markets especially the mid cap stocks after a tremendous rally in last session are showing some sign of fatigue but are still managing to hold in green while the blue chips are once again witnessing return of fervor with 20 out of 30 stocks advancing on the Sensex. The paper stocks continue to remain in jubilant mood and while AP Paper Mills is again locked in upper circuit other paper stocks too are trading higher. IT Tech, CG and CD stocks have taken the lead while the Auto stocks are the only gauge trading in red after Maharashtra state government reportedly withdrew a sales tax exemption offered to several mega projects in state's new automobile hub Chakan-Talegaon . The incentives were offered to woo big investments to Maharashtra; with the roll back the automobile industry has expressed its concern that the government has changed the rules after the works got started.

The BSE Sensex is currently trading at 19,473.63, up by 183.45 points or 0.95%. The index has touched a high of 19,485.71 and a low of 19,339.75 respectively. 20 stocks were advancing against 10 declines on the index.

In the broader markets the BSE Mid cap and Small cap indices climbed 0.35% and 0.65% respectively.

The top gaining sectoral indices on the BSE were, IT up by 1.97%, Teck up by 1.26%, CG up by 1.20%, CD up by 1.11% and Oil & Gas was up by 1.06%. While the Auto index remained the sole loser in the space down 0.30%.

The top gainers on the Sensex were Hero Honda up by 3.91%, TCS up by 3.25%, Infosys up by 2.36%, Tata Power up by 1.67% and ONGC was up by 1.66%.

On the flip side, M&M down by 2.82%, RCom down by 2.09%, Cipla down by 2.01%, Bharti Airtel down by 1.52% and Maruti Suzuki down by 0.91% were the top losers on the index.

Meanwhile, government has once again delayed a decision on levying service tax on transport of goods by rail to July 1. The move to defer the levy of tax came after Railway Minister Mamata Banerjee put pressure on the government to waive off service tax as it had done in the previous year. This is the fourth time that the government is postponing a decision on service tax on rail freight which was to be implemented from April 1, 2010.

Earlier in Budget 2009-10, the government had proposed a 10% service tax on goods carried by the railways to provide a level-playing field to transport of goods by road. However, it exempted rail freight from service tax in September 2009. However, in Budget 2010-2011, Pranab Mukherjee announced that the exemption from service tax would be withdrawn.

The service tax attracted an abatement of 70% of the gross value of freight charged on goods (other than exempted goods). This translated to a tax on only 30% of the value of transported goods. The service tax on rail would result in an increase in freight rates between 6-7%, in case the railway decides to pass it on to the consumers. With high food inflation, which has again entered double digits at 10.05% for the week ended March 12, while the overall wholesale price inflation stood at 8.31% in February, this would have further fuelled prices.

The exchequer has already lost around Rs 800 crore in 2010-11 as the finance ministry decided not to levy service tax on transport of goods through rail this fiscal. Service Tax is a form of indirect tax imposed on specified services called 'taxable services'. The objective behind levying service tax is to reduce the degree of intensity of taxation on manufacturing and trade without forcing the government to compromise on the revenue needs. The intention of the government is to gradually increase the list of taxable services until most services fall within the scope of service tax.

The S&P CNX Nifty is currently trading at 5,841.55, higher by 53.90 points or 0.93%. The index has touched a high of 5,844.00 and a low of 5,803.05 respectively. There were 32 stocks advancing against 18 declines on the index.

The top gainers of the Nifty were Hero Honda up by 3.84%, TCS up by 3.16%, Infosys up by 2.37%, L&T up by 1.83% and Grasim up by 1.72%.

M&M down by 2.82%, RCom down by 2.14%, Cipla down by 2.04%, Bharti Airtel down by 1.46% and Ambuja Cement down by 1.16%, were the major losers on the index.

Asian markets were trading mostly in the green zone; Hang Seng added 22.68 points or 0.10% to 23,474.11, Jakarta Composite climbed 22.67 points or 0.62% to 3,663.65, KLSE Composite advanced 4.71 points or 0.31% to 1,536.34, Nikkei 225 rose 26.97 points or 0.28% to 9,735.76, Straits Times gained 1.96 points or 0.06% to 3,097.28 and Seoul Composite moved up 6.36 points or 0.30% to 2,097.74.

On the other hand, Shanghai Composite plunged 28.62 points or 0.97% to 2,927.15 and Taiwan Weighted shed 12.12 points or 0.14% to 8,634.19.

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