Market Likely To Extend Its Rally
Indian equities indices snapped its five-day losing streak on Wednesday after getting clarification about the MAT. Foreign institutional investors (FIIs) from countries with which India has double taxation avoidance agreements (DTAAs) that specifically exempt them from capital gains tax may escape minimum alternate tax (MAT) demands from the income tax department. The Sensex finally closed 214 points higher at 27,890 and the Nifty rose 0.62% to 8,429.70.
India has DTAAs with 88 nations, of which 85 are in force. DTAAs with Mauritius, Singapore, Cyprus, France and the Netherlands exempt funds from capital gains tax in India, while those with the US, the UK and Luxembourg allow India to impose capital gains tax the way it wants to. FIIs from countries with treaty benefits such as Singapore, Mauritius and the Netherlands have received tax notices making MAT demands. Despite the DTAA exemption, 46% of the flows (from the US, the UK and Luxembourg) will face MAT demands.
U.S. stocks closed higher on Wednesday as better than expected earnings and an upbeat report on existing homes sales fueled investor confidence. The tech-heavy Nasdaq Composite rose for the third-straight session and sits only 13 points below its record close reached on March 10, 2000. The tech-heavy index added 21 points, or 0.4%, to 5,035.17. The S&P 500 closed 10.66 points, or 0.5%, higher at 2,107.95 and the Dow Jones Industrial Average gained 88.35 points, or 0.5%, to 18,038.07.
European stocks pulled back from earlier highs to finish in red with a series of weak company earnings reports and awaited the next moves concerning Greece. The Stoxx Europe 600 index SXXP dropped 0.03% to end at 408.99, after closing at the seventh-highest level this year on Tuesday. Germany’s DAX 30 index DAX dipped 0.6% to 11,867.37, while France’s CAC 40 index rose 0.4% to 5,211.09. London's benchmark FTSE 100 index ended the day down 0.49% to 7,028.24 points.
Asian stocks rose for a third day following U.S. equities climbed overnight despite HSBC PMI showing China's manufacturing activity at a one-year low. Japan’s Nikkei 225 Stock Average added 0.35% as the yen slid for a fourth day against the dollar. The measure closed above 20,000 yesterday for the first time since April 2000. South Korea's benchmark Kospi index climbed up steadily, rewriting a three-and-a-half-year high on Thursday, thanks to a slew of better-than-expected corporate results. The Shanghai Composite Index rose 0.2%, after swinging between gains and losses, while the Hang Seng Index added 0.9%.
The preliminary Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics was at 49.2, compared with market estimate of 49.6, which was also March’s final reading. Numbers below 50 indicate contraction.
SGX Nifty is trading up by 30 points. Indian market is likely to extend its rally after getting clarification about the MAT. HDFC Bank, Advanta, Cairn, Cera, Cyient, Gujarat Gas, M&M Fiance, L&T Fiance, MRF, Sasken and SKF India would be reporting fourth quarter earnings today.