Nifty ends above 5700; Maruti up 5%, Core Edu adds 19%

The market closed on a positive note as it seemed to digest details of the Union Budget. After major sell-off seen on Thursday, the market managed to pullback today especially in the last few trading hours. As the finance ministry issued clarification on tax residency certificates (TRC) calmed nerves.

The Sensex ended the day up 56.98 points at 18918.52 while the Nifty added 26.65 points to close at 5719.70.

Adding 5%, Maruti was the biggest gainer of the day on the BSE. The car maker reported February sales largely in-line with expectations. The management also clarified to analysts that the hike in withholding tax on royalty in Budget from 10 percent to 25 percent will not impact them as the India-Japan double taxation treaty provides that withholding tax does not exceed 10 percent.

Other major gainers included Jindal Steel (up 2.9 percent), Tata Power (up 2.7 percent) and Bajaj Auto (up 2.6 percent).

On the downside were Bharti Airtel (down 3.9 percent), ITC (down 1.4 percent) and Dr Reddy's Lab, Hero MotoCorp, TCS losing around 1 percent each.

Meanwhile, the BSE midcap which was severely battered this week, managed to gain marginally by 0.3 percent.  However, one of the major losers among the midcap stocks, Core Education jumped 18.78 percent to Rs 65.15. The IT education firm today clarified that it was indeed the sale of shares pledged by the promoters that saw the stock tumble from a high of Rs 300 to a low of Rs 49.5, within four trading sessions.

Among the other midcap stocks, Opto Circuits, Ashok Leyland and UCO Bank are some the big gainers adding 4-5 percent.

Key equity benchmarks recover after the finance ministry clarified on finance minister P Chidambaram's tax residency certificates announcement, which had created confusion among FIIs.

At 14.07 hrs IST, the Sensex is up 105.18 points or 0.56 percent at 18966.72, and the Nifty up 37.85 points or 0.66 percent at 5730.90.

The finance ministry said on Friday it will not question the validity of tax residency certificates (TRCs) held by foreign investors, while noting the current double-tax treaty with Mauritius remains in effect, pending continued talks.

''Nothing new has been done on tax residency certificate (TRC) for foreign investors that was not there last year; current treaty on double-tax avoidance with Mauritius holds pending talks,'' the finance ministry statement says.

The clarification from the ministry comes after the government created confusion with a proposal on Thurday stating a tax residency certificate "shall be necessary but not a sufficient condition" to take advantage of double taxation avoidance agreements.

Meanwhile, shares in real estate developer DLF fall 4.8 percent amid weak sentiment and on fears that demand for premium housing may be hit after the 2013/14 budget introduced a 10 percent surcharge on taxpayers with annual income of more than Rs 10 million.

"The surcharge and less abatement in service tax will hurt the disposable income and affordability for premium housing," said an analyst tracking the sector.

Other premium housing developers also fall, with Oberoi Realty down 3.1 percent, Sobha Developers down 2.1 percent.

The market came off highs in afternoon trade. The Nifty was hovering around 5700 pulled lower by select rate sensitive and heavyweight stocks.

The Sensex was up 25.64 points at 18887.18, and the Nifty gained 10.55 points at 5703.60.

Concerns with respect to the tax residency certificates (TRC) continued after the Finance Minister said it will not be enough for claiming benefits under the double taxation avoidance agreement. Experts say that the use of term 'beneficial ownership' is worrying investors and the FM may drop additional qualification provision if FIIs are not convinced.

Moving to stocks, Maruti Suzuki (up 3.9 percent), Tata Power (up 3 percent), Jindal Steel (up 2.9 percent) and HDFC (up 2.2 percent) were some of the big gainers on the Sensex.

Auto stocks were in focus as February sales numbers have started to trickle in. L&T rallied (around 1%) after Credit Suisse upgraded the stock to neutral with a target of Rs 1379. L&T has underperformed the market by nearly 19% since November, at current valuations most concerns seem priced in.

Pantaloon also saw some recovery (up 1%) after yesterday's big slide. In an interview to CNBC-TV18, Rakesh Biyani, joint MD of the company said the correction could have been due to selling by Mauritius investors. "Their pledged share percentage stands unchanged & they expect clarification from Sebi on FII classification as FDI," he said.

United Spirits too rallied 3 percent after the Competition Commission of India (CCI) cleared the Rs 11,160 crore USL -Diageo deal. The conclusion of the deal could provide a life-line to the now grounded Kingfisher Airlines, which owes Rs 7,000 crore to a consortium of 17 banks.

Mphasis recovered some ground after the sharp fall on the back of weak results. The management clarified that they are now focusing on growing the direct business.

Losing around 2 percent each, Dr Reddy's Lab and Bharti Airtel were the major losers on the Sensex.
 
Globally it was weak session across Asia with China seeing 1 percent cuts on the back of weak manufacturing data. US fiscal woes were also in focus because of the sequester today.

Key equity benchmarks gave up some of their early morning gains. The Sensex is up 0.20 percent, rebounding from three-month lows hit in the previous session, while the 50-share Nifty is also up 0.24 percent.

Top gainers on the Nifty are: Reliance Infra (3.97 percent), Power Grid Corp (3.84 percent), Jindal Steel (3.83 percent), BPCL (3.80 percent) and Jaiprakash Associates (3.59 percent)

Technology shares gain as a weakening rupee is seen benefiting returns from overseas profits: Mahindra Satyam is up 3.50 percent, Tech Mahindra is up 4.61 percent, while Wipro is up 1.6 percent.

Oil explorers bounced back after initial losses on worries that cost-sharing recovery mechanism will be withdrawn after the government's planned move to a revenue-sharing policy from profit-sharing now.

Oil and Natural Gas Corp recovers from day's low and is up 1.72 percent. Oil India is up 2.37 percent, after Budget failed to present a credible roadmap on subsidy reduction. BPCL and HPCL are both up over 3 percent each.

Overall, traders say sentiment remains weak after the 2013/14 budget unveiled on Thursday was seen as focusing on revenue-raising measures, including duties on wealthier income earners, to pay for an increase in spending.

Data showing worse-than-expected 4.5 percent growth in GDP in the quarter ended December, also hurt sentiment.

BSE Sensex and NSE Nifty strengthened their positions since the first trades. At 10.49 AM, the Sensex had moved up 71.15 points at 18932.69, and the Nifty gained 23.35 points at 5716.40.

Jindal Steel remained top gainer in the indices with nearly 5 percent gains, its peers in the metal industry also saw significant gains. Coal India, NMDC, Tata Steel were all trading strong.

After the infra boost mentioned in the Union Budget , JP Associates appreciated 4 percent, Larsen rose 1.76 percent and Cummins India jumped 2.7 percent.

Autos were also the darling of the traders as companies announced their monthly sales numbers. Maruti surged 2.75 percent, Tata Motors and Mahindra and Mahindra rose over 1 percent each. Despite good sales numbers, HeroMotoCorp was down 2.7 percent. Unconfirmed sources say  that the company was facing Union trouble.

In the banking space, ICICI Bank (up 2 percent) and HDFC twins were the gainers in the private banking arena while Bank of Baroda and PNB were the public sector bank gainers.

With no specific sweeteners for equity markets - despite high expectations - finance minister P Chidambarm's Budget failed to galvanize investors a day after. Post the steep correction on Thursday, which coincided with expiry, benchmark indices opened flat led by technology and infrastructure stocks. Stocks that have opened stable include HUL, Bharti, ITC, L&T  and ICICI Bank. Oil and gas as well as auto stocks, however, threw a spanner on the recovery mode of the market.

At 09.32 AM, the Sensex was up 6.57 points at 18868.11, and the Nifty moved up 3.55 points at 5696.60. Power Grid was the top gainer with 2.78 percent gains, followed by Jindal Steel.  In the IT space, Wipro rose 1.40 percent, Infosys was up close to 1 percent, Tech Mahindra jumped 2.32 percent and Mahindra Satyam rose 1.7 percent. TCS, Howver, was down 1.04 percent. Mphasis was disowned after it reported lower-than-expected quarterly numbers.

The midcap index opened in the green and beaten down stocks like GMR, Lanco, Core Eductaion etc made U-turn from their previous levels.

Whilst GAAR has been postponed by two years, the necessity of a Tax Residency Certificate (TRC) to avail the DTAA benefits also spooked investors. Top losers on the index at the moment are Lupin, DLF, ONGC, Cairn , Sun Pharma, Ranabxy Hindalco and NTPC.

Global markets were trading mixed. Dow, though stood within the striking distance of its all time high level of  14164.5, dropped its pace to close below the high point of the day. Investors lost interest towards the end of the day on dissapointing GDP numbers.