Indian Markets end truncated week with marginal gains - Eastern Financiers

Markets ended the truncated week of trade with marginal gains amidst a lot of volatility. In the absence of domestic triggers, markets mainly tracked global events. The volatility was aggravated owing to the settlement in the December F&O series. Nifty ended the week at 6313.80, up 36.60 points or 0.58 percent and Sensex climbed 113.86 points or 0.54 percent to conclude trade at 21193.58. Sectoral indices were mixed in nature with more gainers than losers. Foreign investors continued to fancy Indian markets as they remained net buyers for yet another week. Overseas investors poured in Rs.1215.55 Cr into the markets this week. The INR closed flat on a Weekon-Week basis against major global currencies. This week some important sectoral developments took place, which the market participants followed closely. These included the cabinet nod to supply coal for some stalled power projects, finalization of norms for interest free loans to the sugar sector, etc. Also, structural reform in the form of suggestion by the Finance Ministry to treat FPIs akin with FIIs also drew attention from investors.

The Government approved modalities for the beleaguered sugar industry to avail interest-free loans to the tune of Rs. 6,600 crore from banks for effecting timely payment to cane growers, this week. The entire interest burden on the loan of about Rs 6,600 crore, estimated at Rs 2,750 crore over the next five years, will be borne by the government from the Sugar Development Fund (SDF). As per the guidelines approved by the CCEA, the loans would be equivalent to the excise duty, cess and surcharge on sugar paid by the mills in the past three years. Mills have to repay the loans in five years and can avail of a moratorium on repayment for the first two years. The sugar stocks rallied steadily in response to the move.

On the structural front, the SEBI said that it received a note from the department of economic affairs in the finance ministry, suggesting that FPIs be treated akin to FIIs for tax purposes. The proposal was originally made by the KM Chandrashekhar panel that reviewed various classes of foreign investors. Currently, long-term capital gains on listed equities are not taxed in the case of both FIIs and QFIs. But FIIs and their sub accounts enjoy a more attractive tax regime than QFIs for short-term capital gains. With the new rule, all these investors, now categorized as FPIs, will be treated alike. Should the tax treatment be given effect, Foreign flows are expected to improve further in the near future.

Meanwhile, rating agency Crisil said that it sees the Government over-shooting its fiscal deficit target of 4.8% by 0.40% this fiscal. It further added that the best way to contain the deficit within target is by the way of payment of special dividend by cash-rich PSUs, who are in a "comfortable" position to pay close to Rs.64,000 Cr without hurting their growth plans.

Source : Equity Bulls

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