Sensex Gives Up Some Gains After Rising Nearly 250 Points

BSE Sensex and Nifty traded higher on Friday, drawing support from the government’s decision to waive imposition of minimum alternate tax (MAT) on foreign investors. But continued selloff in global markets capped the gains. At 10:22 a.m., the Sensex was up 135 points to 25,830, well off is day’s high of 25,939. The Nifty traded 45 points higher at 7,831.

Here are top 10 developments

1) The government last evening announced the waiver of imposition of a minimum alternative tax on foreign funds for the period prior to April 1, 2015. Finance Minister Arun Jaitley said the government has accepted the recommendations of a panel set up to examine the issue, and said he would make the change permanent through legislation in the next Parliament session.

2) Mr Jaitley said that pending the change in the income tax law, a notice would be circulated to tax officers ordering them not to issue any more claims under MAT.

3) The government’s announcement comes in the wake of record selling from foreign investors last month. In August, foreign investors sold shares worth Rs 16,877 crore. Yesterday, foreign investors sold Indian stocks worth Rs 675.32 crore. The selling pressure from foreign investors has taken a big toll on Indian markets with Sensex and Nifty falling to about year lows.

4) Analysts have welcomed the government’s decision on MAT but they don’t see much impact from it on domestic markets. They say that domestic equities are likely to react to happenings in global markets. Gaurang Shah of Geojit BNP Paribas Financial Services said that the MAT decision may stem the outflows from foreign investors but it unlikely to stop altogether unless the global markets stablise.

5) Concerns over China’s economy, coupled with a possibility of a rate hike in the US later this month, had triggered a fresh round of selling in global markets yesterday with Wall Street tumbling 3 per cent overnight.

6) Markets in China today fell nearly 4.5 per cent today in early trade before recovering to trade 0.66 per cent lower.

7) To add to the concerns, the head of the International Monetary Fund (IMF) Christine Lagarde yesterday said global growth is likely to be weaker than expected due to a slower recovery in advanced economies and a further slowdown in emerging nations.

8) Her comments come less than two months after IMF had downgraded its outlook for global growth. The IMF in July forecast global growth at 3.3 per cent this year, slightly below last year’s 3.4 per cent.

9) A delay in recovery in corporate earnings and the global turmoil has led CLSA, Macquarie, Barclays and Ambit to downgrade Indian shares over the last few days. The series of downgrades has hurt sentiments in Indian markets, traders say.

10) Traders would be closing watching the value of the rupee as it impacts the dollar returns of foreign investors. The rupee opened lower at 66.32/dollar today but pulled back to 66.23 later. Yesterday, the rupee had closed at 66.22.