Indian equities pare some losses; as IT and Capital goods stocks rec

Indian frontline equity indices have come off a great deal from the intraday lows as investors showed some buying interests in blue chip stocks after the recent drubbing. The indices attempted to re-conquer the psychological 5,500 and 18,350 levels as bellwethers from the defensive Healthcare counter along with majors from Capital Goods and IT sectors surged higher. Meanwhile in the broader market, media stocks witnessed an exuberant rally as UTV skyrocketed 11.54%, TV Today zoomed 10.79%, IBN18 Broadcast surged 3.43% and NDTV spurted by 13.60%, after reports that FDI holding in MNCs would be raised to 75%. However, hefty selling pressure on the rate sensitive Automobile and the metal index has prevented the benchmarks from breaking in to the green terrain. While profit booking in heavyweights like Reliance Industries and ONGC too has weighed on sentiments. Investor's morale also remained weak as leads from the global front remained high subdued. Most of the Asian markets are closed today and those which are open traded with notable losses while the European markets too have got off to a somber opening, thereby not giving any kind of upside triggers to the local markets. However, investors also went on to overlook the wilt in international crude oil prices which slipped below $100 a barrel in New York.

Back home, the broader markets too succumbed to the selling pressure that was exerted on their larger peers. The midcap index declined by 0.64% and the smallcap index eased 0.24% points. The market breadth on the BSE was in favor of declines in the ratio of 990:1462 while 103 scrips remained unchanged.

The BSE Sensex slipped by 92.35 points or 0.50% at 18,284.13. The index touched a high and a low of 18,371.28 and 18,258.42 respectively.

The BSE Mid-cap index declined 0.64% and Small-cap index eased 0.24%.

On the BSE sectoral front, Healthcare up 0.06% and CD up 0.01% remained the only gainers.

While, Auto down 1.24%, Metal down 1.19%, Power down 0.77%, Oil & Gas down 0.74% and Bankex down 0.68% were the major laggards in the BSE sectoral space.  The top gainers on the Sensex were Cipla up 1.14%, HDFC up 0.93%, HDFC Bank up 0.64%, TCS up 0.40% and Bharti Airtel up 0.20%.

On the flip side JP Associates down 3.07%, Bajaj Auto down 2.24%, Hindalco down 1.80%, M&M down 1.60% and SBI down 1.50% were the major losers on the index.

India, which already has comprehensive Double Taxation Avoidance Agreements (DTAA) with around 80 countries, has notified the DTAA with the Government of Mozambique for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income on May 31, 2011.

Double taxation is the imposition of two or more taxes on the same income (in the case of income taxes), asset (in the case of capital taxes), or financial transaction (in the case of sales taxes). Such double tax liabilities are mitigated by tax treaties like DTAA between countries.

Besides facilitating economic cooperation, the DTAA between India and Mozambique provides that business profits will be taxable in the source state if the activities of an enterprise constitute a permanent establishment in the source state. Examples of permanent establishment include a branch, factory, office, place of management, etc. Profits of a construction, assembly or installation projects will be taxed in the state of source if the project continues in that state for more than 12 months, according to the official statement issued by the finance ministry.

Under the agreement, the profits derived by an enterprise from the operation of ships or aircraft in international traffic shall be taxable in the country of residence of the enterprise. Moreover, dividends, interest and royalties income will be taxed both in the country of residence and in the country of source. However, the maximum rate of tax to be charged in the country of source will not exceed 7.5% in the case of dividends and 10% in the case of interest and royalties. Capital gains from the sale of shares will be taxable in the country of source, the release stated.

According to the statement, the nations will also engage in effective exchange of information and assistance in collection of taxes between tax authorities of the two countries in line with internationally accepted standards including exchange of banking information and incorporates anti-abuse provisions to ensure that the benefits of the Agreement are availed of by the genuine residents of the two countries.

The pact will also provide tax stability to the residents of India and Mozambique and facilitate mutual economic cooperation, besides stimulating the flow of investment, technology and services between India and Mozambique. The S&P CNX Nifty shed 27.20 points or 0.49% at 5,489.55. The index touched high and low of 5,515.60 and 5,479.85 respectively.

The top gainers on the Nifty were Cipla up 1.17%, Ranbaxy up 0.94%, HDFC up 0.83%, Siemens up 0.63% and SUN Pharma up 0.56%.

On the other hand, JP Associates down 2.95%, Bajaj Auto down 2.72%, Sesa Goa down 2.25%, Hindalco down 1.85% and M&M down 1.82% were the major losers on the index.

On the Asian front, Jakarta Composite down 0.40%, KLSE Composite declined 0.34%, Nikkei 225 drifted 1.18% and Straits Times fell 0.97%. Stock markets in China, Hong Kong, South Korea and Taiwan remained closed on account of public Holiday.

The European markets have opened a negative note as the France's CAC 40 eased 0.36%, Germany's DAX lost 0.34% and London's FTSE declined 0.43%.

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