Sensex Rises 204 Points on Short Covering, Tax Clarity

Mumbai: A benchmark index for Indian equities markets closed 204 points higher on short covering before the month's contract expiry and after reports that the government was not planning to tax all foreign investors except those who fail regulatory checks.

The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE), which opened at 17,209.13 points, closed at 17,257.36 points, up 204.58 points or 1.2 percent compared to its previous close at 17,052.78 points.

The Sensex had risen to an intra-day high of 17,366.84 points and a low of 17,061.16 points.

The 50-scrip S&P CNX Nifty of the National Stock Exchange also closed higher at 5,243.15 points, up 58.9 points or 1.14 percent from its previous close.

The markets were wary of some budget proposals which could result in overseas funds getting taxed when buying into Indian equities using participatory notes or P-notes.

Reports on some television channels cited unnamed financial ministry officials to clarify that the government would not tax every foreign institutional investors (FIIs) but would levy tax on only those who fail regulatory checks.

There were concerns that the proposed General Anti-Avoidance Rule or GAAR provisions in the Budget, which empowers authorities to deny tax benefits to transactions aimed solely at saving tax, will target Participatory notes.

Broader markets also rose with the BSE 500 index closing 0.86 percent up. The BSE midcap and smallcap indices closed flat.

Consumer durables, FMCG and realty stocks were among the main gainers, while power scrips edged lower.

Gainers on the Sensex included DLF, up 4.31 percent at 197.30; HDFC, up 2.5 percent at 667; ITC, up 1.58 percent at 225.50 and Infosys, up 1.55 percent at 2,875.35.

Among losers on the benchmark were Maruti Suzuki, down 1.79 percent at 1,275.15; BHEL, down 1.05 percent at 255.35; Coal India, down 0.69 percent at 330.40 and NTPC, down 0.54 percent at 164.60.

The market breadth was negative with 1,187 stocks advancing, 1,709 on the decline and 121 remaining unchanged. According to data available with Securities and Exchange Board of India (SEBI), FIIs sold stocks worth $18.39 million.

Asian markets were trading higher after US Federal Reserve Chairman Ben Bernanke said that he would maintain an easy monetary policy as the U.S. economy was still fragile.

The Japanese Nikkei index closed 2.36 percent up at 10,255.15 points.

Hong Kong's index also ended 1.83 percent up at 21,046.91 points, while the Chinese Shanghai Composite index closed 0.15 percent down at 2,347.18 points.

European bourses were in the green.

Britain's FTSE 100 was up 0.28 percent at 5,919.08 points, while the German DAX was trading 0.63 percent higher at 7,123.97 points.

The French CAC 40 was ruling 0.32 percent up at 3,513.15 points.