Markets trade near day's high; oil & gas takes the lead

The Indian equity markets are trading near the high points of the day and have garnered considerable gains. The Nifty is trading over the 5,300 mark after crossing it in mid morning session. Market heavyweight Reliance Industries continue to trade firm with gains of 1.97%, after more than 10% fall in last few sessions. On sectoral front oil & gas, banks, metal, FMCG, health care and select auto companies' shares were taking the markets higher. However, consumer durables and power sector stocks were still lagging behind the race. Global cues are positive as Asian markets are trading in the positive territory. Back home market breadth continued to remain firm; there were 1,376 shares on the gaining side against 1,036 shares on the losing side while 105 shares remained unchanged.

The BSE Sensex is currently trading at 17,667.47, up by 160.84 points or 0.92%. The index has touched a high and low of 17,686.57 and 17,504.27 respectively. There were 20 stocks advancing against 10 declines on the index.

The broader markets are showing strength; the BSE Mid cap and Small cap indices were up by 0.62% and 0.45% respectively.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.38%, Bankex up by 1.14%, Metal up by 1.01%, FMCG up by 0.82% and HC was up by 0.78%, while, the only losers were CD down by 0.42% and Power down by 0.17%.

The top gainer on the Sensex were Hindalco Inds up by 2.23%, RIL up by 1.97%, HDFC up by 1.83%, Bharti Airtel up by 1.77% and Hero Honda too up by 1.47%

On the flip side, JP Associates down by 1.33%, Cipla down by 1.04%, DLF down by 0.96%, BHEL down by 0.91% and Wipro down by 0.71% were the losers on the Sensex.

Meanwhile, under the pressure from the Opposition and the civil society on the issue of black money, the government on June 20 said it has proposed re-negotiation by the August of three decade old taxation treaty with Mauritius, misused by many multinational companies and Indian companies to avoid tax or to route illegal funds. The finance secretary Sunil Mitra said, 'We have suggested dates in July and August to resume re-negotiations of Double Taxation Avoidance Agreement (DTAA). It will depend on their (Mauritius) convenience.'

The Mauritius government has also agreed to review tax treaty with India, as per the senior official of the Mauritius government, 'Mauritius is willing to re-open tax treaty with India and we would like to address India's concerns, including round-tripping of funds by Indian companies. The next meeting of joint-working group of India and Mauritius could be held soon, probably in Mauritius'. The last meeting was held in New Delhi last year, he added.

The Indian government has been pressing Mauritius for revive DTAA since 2006 to tighten registration norms for its companies as it is losing more than $600 million every year in revenue due to DTAA. The taxation treaty provide, capital gains arising in India from the sale of securities can only be taxed in Mauritius and since Mauritius does not tax capital gain, companies register themselves in island nation to invest in India to save tax.

It is understood that, most of the companies register them in countries like Mauritius and route their illegal money back to India to avoid taxes as DTAA is aimed at avoiding double taxation, the process is called round-tripping. It is believed that significant amount of India's FDI and private equity into the stock market are round-tripped through Mauritius and other countries like Mauritius which have tax incentive policy. After the government's announcement for review of DTAA, the Bombay Stock Exchange (BSE) fell as much as much as 3.1%.

As per the official data, since 2000, FDI flows into India from Mauritius sum to $55.2 billion around 42% of the total FDI, from April 2011, in present financial year India have received around $976 million.  

The S&P CNX Nifty is currently trading at 5,300.50, up by 42.60 points or 0.81%. The index has touched a high and low of 5,313.25 and 5,257.00 respectively. There were 36 stocks advancing against 14 declines on the index.

The top gainers of the Nifty are IDFC up by 3.18%, RIL up by 2.16%, Sun Pharma up by 2.11%, Hindalco up by 2.02% and Bharti Airtel up by 1.87%.

On the other hand, HCL Tech down by 1.96%, JP Associates down by 1.33%, DLF down by 1.23%, Cipla down by 1.10% and BPCL down by 0.97% were the top losers.

The Asian markets continue to trade firm, Shanghai Composite was up by 0.67%, Hang Seng gained 0.83%, Jakarta Composite was up by 0.83%, KLSE Composite was higher by 0.01%, Nikkei 225 was surged by 1.04% and Straits Times has gained 0.80% Seoul Composite up 1.39% and Taiwan Weighted was higher by 0.78%.

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