Sensex, Nifty end lower on tax concerns; Axis, Maruti gainers

3:30 pm Market closing: The market ended lower on Mauritius tax treaty. The Sensex slipped  175.51 points or 0.7 percent at 25597.02, and the Nifty ended 38.95 points or 0.5 percent at 7848.85. About 1103 shares have advanced, 1446 shares declined, and 158 shares are unchanged.

Axis Bank, Asian Paints, Maruti, NTPC and L&T were gainers while Bharti Airtel, SBI, Dr Reddy's Labs, Tata Motors and BHEL were losers in the Sensex.

2:55 pm Results: South Indian Bank reported more than fourfold jump in net profit at Rs 72.97 crore for March quarter on account of higher income from other sources and a cut down in provisioning.

The bank's net profit stood at Rs 16.32 crore in the same period of 2014-15.

"Total income has increased to Rs 1,506.94 crore for the quarter ended March of 2015-16 as against Rs 1,444.37 crore during the same period of 2014-15," it said in a regulatory filing.

For the quarter, bank's income from other sources jumped 80 per cent to Rs 52.71 crore. While, provision for bad loans and contingencies trimmed to Rs 116.25 crore for the quarter under review, from Rs 137.74 crore.

2:30 pm GAAR to override bilateral tax treaty provisions: A day after the revision of bilateral tax treaty with Mauritius, Finance Ministry today said GAAR provisions, which are to take effect from April next year, will override the DTAA provisions in case they are abused.

"GAAR being anti-abuse provision can prevail over treaty if it is proved that it is an abuse of treaty. With LoB clause in the treaty being fulfilled, it may be difficult to establish that treaty is being misused," Revenue Secretary Hasmukh Adhia said.

The Limitation of Benefit clause under the Double Taxation Avoidance Agreement (DTAA) limits tax benefits to those who meet certain conditions relating to business, residency and investment.

Under the revised tax treaty inked yesterday, India will begin imposing capital gains tax on investments routed through Mauritius from next April to curb tax evasion and round- tripping of funds - a move that may have a significant bearing on capital flows from the island nation.

The market is quite volatile, getting nervous on the Maritius treaty. The Sensex is down 170.23 points or 0.7 percent at 25602.30, and the Nifty is down 39.25 points or 0.5 percent at 7848.55. About 930 shares have advanced, 1478 shares declined, and 155 shares are unchanged.

Axis Bank, Maruti, L&T, Asian Paints and NTPC are top gainers while SBI, BHEL, Dr Reddy's Labs, ITC and Bharti are losers in the Sensex.

Finance Ministry today said India will continue to attract investments because of the inherent strength and the return it offers to investors. Amid concerns on how markets will react to the decision taken by India to tax capital gains from Mauritius, Economic Affairs Secretary Shaktikanta Das said international community is moving away from countries with zero tax regime. "India continues to be a robust economy and investments will come in because of fundamentals of the economy and because of the strength and resilience of the economy and return that India offers post tax," Das said.

The amendments to the tax treaty with Mauritius provide India the right to impose capital gains tax on shares sold in Indian companies post April 2017. Besides, capital gains tax will be imposed at 50 per cent of the prevailing domestic rate.

1:30 pm Fund plans: Future Enterprise is looking to monetise in each of the next five years at least one investment in the Kishore Biyani-led Future Group firms to realise Rs 10,000 crore. The company currently has investments in Future Supply Chain Solutions, Future Consumer Enterprise, Future Generali India Insurance Co, Future Generali India Life Insurance Co, Future Lifestyle Fashions, Apollo & Goldmohur Mills and Staples. The investments together are valued at present Rs 4,345 crore and are likely to be worth Rs 10,160 crore in the next 3-5 years, FEL said in an investor presentation.

The market is slipping away once again as European market drag lower. The  Sensex is down 233.37 points or 0.9 percent at 25539.16, and the Nifty down 63.15 points or 0.8 percent at 7824.65. About 832 shares have advanced, 1459 shares declined, and 157 shares are unchanged.

BHEL, ITC, Dr Reddy's Labs, SBI and ICICI Bank are major losers in the Sensex while Axis Bank, Maruti, NTPC and Asian Paints are top gainers.

European stocks opened mixed as traders become cautious after Asia markets gave up much of their early gains overnight and oil prices drifted slightly lower.

Claiming that "India had lost face" globally due its taxation policy, Nandita Parker, Managing Partner of Karma Capital, attacked the amendment of the Mauritius agreement, saying it was an impediment to foreign investment.

Parker told CNBC-TV18 in an interview that the lack of clarity with respect to p-notes and GAAR would be an overhang for the market going forward.

Further, she added that the government should take action to remove operational difficulties in the taxation procedure and bring them in line with global standards.

12:30 pm Result: Toyota Motor Corp forecast on Wednesday a bigger than expected 35 percent tumble in net profit for the current year, snapping three straight years of record profit, hit by a sharp appreciation in the yen.

After net profit rose 6.4 percent in the year ended March to 2.31 trillion yen (USD 21.26 billion), Toyota is forecasting it will drop this year to 1.5 trillion yen. That is far short of an average estimate of 2.25 trillion yen for the current year, based on predictions from 28 analysts polled by Thomson Reuters.

Toyota said it was assuming the dollar would average 105 yen this year, versus a far more favourable 120 yen last year. Foreign exchange losses would therefore have a negative impact of 935 billion yen on operating profit this year, it said.

Jittery investors have shrugged off concerns around the Maritius treaty. The market has recovered from early losses. The Sensex is down 22.76 points at 25749.77, and the Nifty up 1.30 points at 7889.10. About 1060 shares have advanced, 1086 shares declined, and 139 shares are unchanged.

Hindalco, Axis Bank, Maruti, Tata Steel and NTPC are gainers while Dr Reddy's Labs, ITC, ONGC, BHEL and Coal India are losers in the Sensex.

Oil prices dipped today after the previous day's rally as Canadian oil companies prepare to restart production after being closed by huge wildfires. The commodity has seen strong swings this week as traders weigh up the effects of the blazes that have torn across the vast oil sands region of Alberta as well as disruptions elsewhere.

Also, yesterday Canadian officials suggested output in could take time to return to normal after the fires.

11:50 am Market check: The Sensex is down 19.13 points  at 25753.40, and the Nifty up 2.10 points  at 7889.90. About 1027 shares have advanced, 1080 shares declined, and 142 shares are unchanged.

11:30 am View on Maritius treaty: The government's decision to amend the Mauritius tax treaty has come under fire from some foreign investors (FPIs) such as Singapore-based Samir Arora.

In an interview with CNBC-TV18, Arora said that mechanics of investing in India were operationally not feasible.

He maintained that under the current structure, foreign investments made through investments such ETFs or participatory notes would come under a cloud as there would be uncertainty on withholding tax.

"I was told that such a tax structure does not exist anywhere in the world barring Argentina," he said.

11:20 am Govt allays fear: Government official says that general anti-avoidance rule (GAAR) provisions may be applied in rare case of conflict with Mauritius treaty. It is unlikely that GAAR provisions will be tweaked on treaty over ride. Returns on P-Notes likely to be affected with Mauritius Treaty.

The market is still in red but the market is steadily making small gains as the Sensex is down 47.18 points or 0.2 percent at 25725.35. The Nifty is down 6 points or at 7881.80. Nifty recovers 100 points while the Sensex is up 300 points from day's low. About 947 shares have advanced, 1024 shares declined, and 113 shares are unchanged.

Hindalco, Axis Bank, NTPC, Maruti and Tata Steel are top gainers in the Sensex. Among the losers are Dr Reddy's Labs, Adani Ports, ONGC, Coal India and SBI are losers in the Sensex.

Market sentiment is dampened as India has made amendments to the Double Taxation Avoidance to get rights to tax capital gains on shares of Indian company sold after April 1, 2017, triggering fresh spell of selling by participants.

Gold prices rose Rs 167 to Rs 29,950 per 10 grams in futures trading today as participants widened bets, triggered by a firming trend overseas. Analysts said a firming trend in the global market where gold climbed for a second day as assets in bullion-backed funds rose to their highest since December 2013 and Goldman Sachs Group Inc raised its price forecasts mainly influenced the precious metal prices at futures trade.

10:55 am Result poll: Kotak Mahindra Bank is likely to see standalone net profit at Rs 689 crore in January-March quarter, up 8.5 percent from Rs 635 crore in last quarter. According to a CNBC-TV18 poll, the private lender's net interest income (NII) may jump 3.8 percent at Rs 1832 crore against Rs 1766 crore in quarter-ago period. Year-on-year numbers are not comparable due to merger of ING Vysya Bank.

10:40 am Just in: In a big boost for telecom companies, Supreme Court has struck down call drop levies, says it's arbitrary & unconstitutional in nature.

10:30 am Raging bull: Terming the amendment to the India-Mauritius Double Tax Avoidance Agreement (DTAA) as a "sensible move by a sensible government", ace investor Rakesh Jhunjhunwala said income on investments made by foreign investors should be subject to tax. "The move is well thought out. It will put all litigation to rest. It is coming into effect in March 2017 anyway," he told CNBC-TV18 in an exclusive interview. Jhunjhunwala's comments came in the wake of the government's decision to amend the Mauritius treaty, which will allow it to levy capital gains tax on FII income. He also allayed fears that the law would hamper inflows coming in through the participatory notes route, saying that as long as FIIs were able to get decent returns from India, they would not mind paying tax.

After a early morning jittery on amendment to the Mauritius Double Tax Avoidance Agreement (DTAA), the market has recovered. The Sensex is down 101.29 points or 0.4 percent at 25671.24, and the Nifty down 27.85 points or 0.3 percent at 7859.95. About 665 shares have advanced, 916 shares declined, and 99 shares are unchanged.

Hindalco, NTPC, Axis Bank, Tata Steel and Maruti are top gainers in the Sensex. Among losers are Bharti Airtel, Tata Motors, Adani Ports, Dr Reddy's Labs and Coal India.

Arvind Sanger of New York-based Geosphere Capital says the amendment made by the government to tweak its tax treaty with Mauritius may be well-intentioned but it could hamper foreign investors' access to the Indian markets. He added that instruments such as participatory notes, which allow foreign investors to skip registration with Sebi to invest in India, may take a hit and that the regular route of investments was too cumbersome for FIIs.

9:55am Interview: Economic Affairs Secretary Shaktikanta Das says this treaty addresses concerns with regard to round-tripping of unaccounted wealth into India. Das is positive there will now be a surge in FDI flows into the country before April 2017. Recently, the finance minister stuck to the time-frame on General Anti-Avoidance Rules (GAAR) announced in his Budget speech last year. He had said it would be implemented from April 1, 2017. Das said there will be no conflict between GAAR and this latest treaty. Infact, GAAR will take note of this treaty, he added.

9:45 am FII view: The amendment made the government to tweak its tax treaty with Mauritius may be well-intentioned but it could hamper foreign investors' access to the Indian markets, says Arvind Sanger of New York-based Geosphere Capital.

Sanger was commenting on the government's decision yesterday to tweak the Mauritius DTAA treaty that would give India the right to tax capital gains on investments originating from the tax haven.

He added that instruments such as participatory notes, which allow foreign investors to skip registration with Sebi to invest in India, may take a hit and that the regular route of investments was too cumbersome for FIIs.

9:30 am Market check: The market has quickly recovered after a very weak opening. The Sensex is down 144.51 points or 0.6 percent at 25628.02, and the Nifty down 41.85 points or 0.5 percent at 7845.95. About 437 shares have advanced, 847 shares declined, and 68 shares are unchanged.

Hindalco, Axis Bank, NTPC, Hero and Maruti are top gainers while Tata Motors, Bharti, BHEL, Coal India and Adani Ports are losers in the Sensex.

The market slipped at the opening on Wednesday. The Sensex is down 339.95 points at 25432.58, and the Nifty is down 99.75 points at 7788.05. About 142 shares have advanced, 649 shares declined, and 24 shares are unchanged.

Indian government amended a long-standing tax treaty with Mauritius that plugs loopholes in the system and aims to check tax evasion. The amendment to the Mauritius Double Tax Avoidance Agreement, which comes into effect April 1, 2017, will give India the right to tax capital gains from investments coming from the tax haven.

Tax lawyers said that while the move may have a short-term negative impact on market sentiment, given the fact that about USD 33 billion of inflows come into India via the controversial participatory-notes route, more sharing of information would be a long-term positive.

Coal India, Tata Motors, BHEL, Bharti Airtel and Adani Port are the top losers, while Hindalco, NTPC and Zee Entertainment are the top gainers.

Asia markets gave up much of their early gains on Wednesday to trade lower as the yen nudged higher against the dollar and oil prices retreated.

US stocks rose across the board on Tuesday, with a jump in oil and a rally in Amazon.com helping propel the S&P 500 to its best day in two months.

The Dow Jones industrial average climbed 1.26 percent to end at 17,928.35 and the S&P 500 jumped 1.25 percent to 2,084.39. The Nasdaq Composite added 1.26 percent to 4,809.88.

The Indian rupee opened lower by 13 paise at 66.80 per dollar on Wednesday versus 66.67 Tuesday.

Bansi Madhavani of India Ratings said, "Medium-term outlook of rupee hinges on global developments, while earnings and flows' position will dictate the near-term range."

"Rupee is likely to stay in the range of 66.10-66.90/dollar in the interim," he added.