Sensex gains 277 pts on FM's word to FPIs, rate cut hopes (Lead)
Mumbai, Aug 6 (IANS) Investors cheered the government's Monday decision to hold discussions with stakeholders over the taxation surcharge on the super-rich category, which has triggered massive outflow of foreign funds.
Hopes of further easing of key lending rates and attractive valuations buoyed the Indian equity markets on Tuesday with the S&P BSE Sensex gaining 277.01 points, or 0.75 per cent, to close at 36,976.85.
Similarly, the NSE Nifty50 gained 85.65 points or 0.79 per cent to close at 10,948.25 points.
On sector specific basis, healthy buying was witnessed in the banking, auto and metal stocks.
The S&P BSE Sensex opened at 36,568.03 from its Monday's close of 36,699.84 and hit an intra-day high of 37,241.77 and low of 36,536.59 before settling at 36,976.85.
on Monday, Finance Minister Nirmala Sitharaman said she would meet FPIs over the issues faced by them. "I have made it absolutely clear that if there are FPIs who want to tell me something, I am quite open to hearing out what they have to say. We have not just left it at that," she said. The list of meetings included discussions with the stock market and investor representatives, she added.
The Finance Minister said the DEA Secretary (Atanu Chakraborty) had also taken out some time to meet FPIs separately and have their views. "I will also meet the FPIs at that DEA Secretary's meeting," she said.
The budget proposal of taxation surcharge on the super-rich category caused massive outflows of foreign funds. Market participants fear that once implemented, the move will adversely impact FPIs, which are set up as non-corporate vehicles.
Typically, FPIs are set up as trusts or limited partnerships in their home jurisdictions. The definition of a partnership firm under the Indian tax law refers to the Indian Partnership Act, which does not recognise foreign partnerships or limited partnerships.
"Market recouped Monday's losses, aided by broad-based buying across sectors supported by the Finance Minister's decision to have a discussion with FPIs amid continued outflow," said Vinod Nair, Head Of Research at Geojit Financial Services. Global cues were positive due to China's step to prevent further slide in the yuan, he added.
The hope for a 25 basis point rate cut on Wednesday too extended some support to the trend, Nair said.
According to Deepak Jasani, Head of Retail Research for HDFC Securities, "technically, while the Nifty has bounced back, the underlying short-term trend remains down. "Further downsides are likely once the immediate support of 10,826 is broken. Any further pullback rallies could find resistance at 11,018-11,080," Jasani said.