Mkts in tizzy over Mauritius tax buzz
MUMBAI: Spooked by the government's proposal to rework the India-Mauritius double tax avoidance treaty to plug revenue leaks, the markets went into panic selling mode on Monday with the sensex closing 364 points down at 17,507, a four-month closing low. Along with the government's moves on the treaty front, Reliance Industries, which carries the maximum weight in the sensex, slid for the seventh session on the trot to close at a twoyear low. Besides, weak global cues, with most European markets trading in the red in the opening hours, also aggravated the negative sentiment on Dalal Street, brokers and dealers said.
The sensex opened slightly higher during the day, but soon selling pressure pulled the market to an intra-day low at 17,314, a loss of over 550 points (or 3%) from its Friday close. However, buying at lower levels helped the index recover substantial ground as it settled with a 2% loss. Real estate, oil & gas, and IT led the slide while consumer durables and banking stocks were the least affected , BSE data showed. Monday's close is its lowest level since February 10. The benchmark has now lost 11% from its April 4 high, which exceeds the 10% level regarded by some as a "correction." The sensex touched its highest level on November 5 at 21,109.
Since most FIIs invest in India through the Mauritius route, taking advantage of the India-Mauritius tax treaty to avoid paying tax on income generated through trading of shares, closing this route could lead to heavy offloading by foreign investors, market players said. FIIs on Monday , however, net sold stocks worth around Rs 500 crore, which is not on the higher side, when compared to the 2% slide in the sensex. "The Mauritius tax treaty plans, along with a slew of weak domestic cues and the developments in Europe led to the day's selling ," said leading broker Motilal Oswal. "There was no buying support today (Monday). But I believe the market should turn around after falling about 2-3 % from here," he added.
MUMBAI: Spooked by the government's proposal to rework the India-Mauritius double tax avoidance treaty to plug revenue leaks, the markets went into panic selling mode on Monday with the sensex closing 364 points down at 17,507, a four-month closing low. Along with the government's moves on the treaty front, Reliance Industries, which carries the maximum weight in the sensex, slid for the seventh session on the trot to close at a twoyear low. Besides, weak global cues, with most European markets trading in the red in the opening hours, also aggravated the negative sentiment on Dalal Street, brokers and dealers said.
The sensex opened slightly higher during the day, but soon selling pressure pulled the market to an intra-day low at 17,314, a loss of over 550 points (or 3%) from its Friday close. However, buying at lower levels helped the index recover substantial ground as it settled with a 2% loss. Real estate, oil & gas, and IT led the slide while consumer durables and banking stocks were the least affected , BSE data showed. Monday's close is its lowest level since February 10. The benchmark has now lost 11% from its April 4 high, which exceeds the 10% level regarded by some as a "correction." The sensex touched its highest level on November 5 at 21,109.
Since most FIIs invest in India through the Mauritius route, taking advantage of the India-Mauritius tax treaty to avoid paying tax on income generated through trading of shares, closing this route could lead to heavy offloading by foreign investors, market players said. FIIs on Monday , however, net sold stocks worth around Rs 500 crore, which is not on the higher side, when compared to the 2% slide in the sensex. "The Mauritius tax treaty plans, along with a slew of weak domestic cues and the developments in Europe led to the day's selling ," said leading broker Motilal Oswal. "There was no buying support today (Monday). But I believe the market should turn around after falling about 2-3 % from here," he added.
No comments:
Post a Comment