Benchmarks make muted start

After scaling fresh all-time highs in the previous session, Indian equity benchmarks have made a muted start as sentiments remained down-beat after India Meteorological Department (IMD) has predicted below normal June-September rains at 95% of the long period average due to El Nino. IMD said there was a 56% probability of below normal to deficient rains, as compared to a 44% chance of rains being normal or better. However, some support came in from report that foreign institutional investors (FIIs) bought shares worth a net Rs 767.61 crore on April 23, 2014, as per provisional data from the stock exchanges. On the global front, the US markets ended mostly higher overnight with Dow closing flat for the first time in many years. Though, there was some cautiousness with the disappointing numbers of General Motors. The Asian markets are struggling at this point of time as the emerging crisis in Ukraine continued to weigh on market sentiment. Back home, on the sectoral front banking, realty and auto witnessed the maximum gain in trade, while oil and gas, FMCG and capital goods remained the top losers on the BSE sectoral space. The broader indices, however, were outperforming benchmarks, while the market breadth on the BSE was positive; there were 927 shares on the gaining side against 761 shares on the losing side while 75 shares remain unchanged. The BSE Sensex opened at 22892.50; about 16 points higher compared to its previous closing of 22876.54, and touched a high and a low of 22939.31 and 22806.54 respectively. The index is currently trading at 22881.06, up by 4.52 points or 0.02%. There were 13 stocks advancing against 17 declines on the index. The overall market breadth has made a strong start with 52.58% stocks advancing against 43.17% declines. The broader indices too were trading in green; the BSE Mid cap index up was by 0.34% and Small cap gained 0.15%.  The top gaining sectoral indices on the BSE were, Bankex up by 0.90%, Realty up by 0.56%, Auto up by 0.44%, Consumer Durables up by 0.43% and Healthcare up by 0.40%, while Oil & Gas down by 1.10%, FMCG down by 0.80%, IT down by 0.27% and Capital Goods down by 0.12% were the top losers on the sectoral index. The top gainers on the Sensex were BHEL up by 2.14%,  Bharti Airtel up by 1.70%, Dr Reddys Lab up by 1.66%, HDFC up by 1.58% and SBI up by 1.57%. On the flip side, ITC was down by 1.27%, RIL was down by 0.99%,  Hindustan Unilever was down by 0.91%, Wipro was down by 0.90% and  NTPC was down by 0.82% were the top losers on the Sensex. Meanwhile, in order to help the US to tackle tax evasion, India has signed an 'in substance' agreement with the US under Foreign Account Tax Compliance Act (FATCA) to combat possible tax evasion by Americans through Indian financial entities. As per the agreement, India will provide US with the available information from Indian financial institutions on offshore accounts or assets of Americans or their entities. However, the US will give information on foreign accounts of Indian individuals, but not entities. The FATCA act is aimed to check and impose withholding tax on illicit activities of some wealthy individuals who use offshore accounts to avoid millions of dollars in taxes. India has agreed to Model 1-Inter governmental Agreement (IGA) under FATCA under which financial entities will be required to report information on US account holders to the US internal revenue service (IRS) through CBDT. According to FATCA act, the US government to sign IGAs with various countries where American individuals and companies may hold accounts and other assets. The noncompliance with FATCA requires the investor to pay 30 percent withholding tax on certain US source payments. The US Treasury introduced two formats of the IGA - Model 1 and Model 2. As per the Model 2, financial institutions are required to report information directly to the US IRS rather than their local jurisdictions. Indian regulators like SEBI and RBI are likely to issue guidelines soon for market intermediaries to ensure compliance of FATCA. After signing of IGA with the US, these regulatory measures would immensely help Indian financial institutions to cope up with this complex regulation. The FATCA is scheduled to come into effect from July 1, 2014. The CNX Nifty opened at 6,855.80; about 15 point higher as compared to its previous closing of 6,840.80, and has touched a high and a low of 6,869.85 and 6,818.20 respectively. The index is currently trading at 6,843.20, up by 2.40 points or 0.04%. There were 21 stocks advancing against 29 declines on the index. The top gainers of the Nifty were BHEL up by 2.16%, Bank of Baroda up by 1.89%, Bharti Airtel up by 1.80 %, Dr. Reddy's Laboratories up by 1.72% and SBI up by 1.59%. On the flip side, Cairn down by 4.99%, ACC down by 2.75%, Asian Paint down by 1.91%, Ambuja Cements down by 1.49% and ITC down by 1.36% were the top losers on the index. Most of the Asian equity indices were trading in red; Shanghai Composite declined 3.41 points or 0.17% to 2,053.62, Hang Seng slipped by 308.00 points or 1.37% to 22,254.80, KLSE Composite decreased 3.02 points or 0.16% to 1,862.26, Straits Times contracted by 15.81 points or 0.48% to 3,268.12, Seoul Composite dropped by 21.75 points or 1.09% to 1,976.59 and Taiwan Weighted was down by 171.06 points or 1.91% to 8,774.39. On the flip side, Jakarta Composite increased 23.82 points or 0.49% to 4,914.90 and Nikkei 225 was up by 31.65 points or 0.22% to 14,436.64.