India shares fall 2.2 pct; GAAR worries revived
May 8 (Reuters) - India's main stock index posted its biggest fall since Feb. 27 on Tuesday after analysts warned about the continued lack of clarity regarding taxation for foreign investors, while the fall in the rupee also weighed.
Stock accelerated their falls late in the session, especially in the Nifty index after stop losses were triggered in futures and options markets.
Blue chip sectors such as software services exporters and banks led decliners, with Tata Consultancy Services and HDFC Bank ending among the big losers on Tuesday.
Despite the government's changes to the General Anti-Avoidance Rule, foreign investors have sold a net of 10.3 billion rupees in Indian stocks on Monday and Tuesday, according to provisional data from the National Stock Exchange.
Analysts said the changes were still vague, and added the uncertainty would continue at least until May 31, when a government committee is expected to provide guidelines.
"Not all potential concerns in regard to GAAR are completely addressed. We still have to be clear how exactly it is going to be implemented," said Pranav Sayta, a tax partner at Ernst & Young.
The 30-share BSE index fell 2.17 percent to 16,546.18 points, while the 50-share NSE index lost 2.23 percent to 4.999.95 points
Foreign investors, who are critical in Indian stock markets, have been net sellers, albeit of a modest 6.3 billion rupees for last month, though analysts have warned selling could accelerate should the uncertainty over GAAR proposals.
Blue chips were heavily hit on Tuesday, especially in the technology sector.
Shares in Tata Consultancy Services fell 5.7 percent after JP Morgan downgraded it to "neutral" from overweight" saying the stock price was now "fully valued" at current 19 time forward fiscal 2013 earnings.
Sentiment for the sector was also hit after U.S.-based Cognizant Technology Solutions Corp lowered its full-year forecast, citing weak demand from North American financial services clients.
Second-ranked Infosys lost 1.8 percent on the day.
Banks also fell, reversing the prior sessions gains. HDFC Bank lost 3.2 percent, while State Bank of India lost 3.6 percent.
Other recent strong performers were among the top decliners. Cigarette maker ITC slumped 4 percent, having gained 17.4 percent in the year to date as of Monday's close.
Reliance Industries shares fell 1 percent on lingering concerns about a standoff with the government over pricing of gas and recovery of input costs from projects.
But among gainers, gas utility stocks benefitted on speculation the government was planning to raise liquefied natural gas imports to meet gas demand, traders said. Shares in Indraprastha Gas added 0.37 percent.
India shares fall 2.2 pct; GAAR worries revived | Reuters
Indian rupee hits 6-month low
MUMBAI, May 7: Indias rupee slid to a near six-month low against the dollar on Monday, prompting the central bank to intervene to prop up the struggling currency, traders said.
The Indian unit fell to an intraday low of 53.74 rupees to the dollar a level last seen in December but then recovered marginally to 52.89.
The rupee is in a challenging environment, the headwinds are too strong.
It is unlikely to appreciate in a hurry, said Sonam Udasi, head of research at IDBI Capital. The partially convertible currency has been hurt by global uncertainty, weak domestic economic data, slowing overseas funds inflows and pressure from oil imp-orters who have to exchange rupees for dollars when they purchase crude.
Energy-hungry India imp-orts four-fifths of its crude oil needs to fuel its economy.
The RBI likely intervened to lift the currency of its intraday lows, a dealer with a Mumbai-based brokerage said, declining to be named. The RBI typically intervenes by buying rupees to prevent volatility and has a policy of not co menting on movements of the forex market. Traders said it was the eleventh time in 2012 that the central bank is believed to have stepped into the market to prop up the rupee. The currency was also boosted by news that Indias government had deferred by a year plans for a proposal which aims to crack down on tax evasion, which had caused concern among foreign investors.
The general anti-avoidance rule, or GAAR, was intended to stop foreign companies evading capital gains tax by routing investments through popular tax havens such as Mauritius. The Indian unit, Asias worst performing currency in 2011, hit a record low of 54.30 against the dollar in mid-December and then rebounded to 48.67 rupees in February, led by strong foreign fund buying of Indian assets.AFP
Indian rupee hits 6-month low | DAWN.COM
it all due to bad fundamental
