Nifty recovers after testing 18-week low; Bharti gains

Indian equity benchmarks recovered from early scare, with recouping half of its losses after the Central Board of Direct Taxes (CBDT) came with clarification on Indo-Mauritius tax treaty.

Nifty had plunged to record its lowest level in more than 18 weeks today post the news that India and Mauritius will restart talks on tax treaty.

However, CBDT clarified that government was yet to start talks with Mauritius on tax treaty, reports CNBC-TV18 quoting agencies. CBDT also said Mauritius has expressed willingness to talk three months ago.

Finance Ministry sources told CNBC-TV18 that Mauritius has agreed to talk on tax treaty this March. But there is no development on tax treaty renegotiation. CNBC-TV18 also learnt that there is no time frame yet for treaty and no specific tax provisions identified for renegotiation.

The 50-share NSE Nifty was struggling to hold the 5300 mark. It was trading at 5,295, down 70 points and the 30-share BSE Sensex fell 232 points to 17,637.

Bharti Airtel and Sun Pharma were the top gainers, with rising more than 1%. Axis Bank, PNB, ICICI Bank and Hero Honda were other gainers.

However, selling continued in heavyweights TCS, ONGC, Reliance Industries, NTPC, Infosys, BHEL, HDFC, HDFC Bank, Wipro and SBI though these stocks recovered from day's low. These stocks were down 1-2.5%.

Reliance Infrastructure and Reliance Communications crashed nearly 6% each as both won't be available in Sensex from August 8. Reliance Capital and Reliance Power lost 3.5%.

Sterlite Industries, Tata Motors, SAIL, HCL Tech, Bajaj Auto, M&M and Cipla were down 2-3%. Grasim plunged 4% as there were reports that it was under CCI scanner.

Midcaps

ILandFS Transport, M&M Financial, 3M India, Pfizer and Amara Raja Batteries gained 1-2.5%. However, GTL was down 55% and GTL Infra down 31.5%. KS Oils plunged 16%. Ruchi Soya and S Kumars Nationwide were down 6-9%.

Smallcaps

Can Fin Homes surged 13%. Money Matters, Zenith Infotech, Mount Everest and JK Cement were up 3-5%. However, Sujana Towers, Shriram EPC, Aegis Logistics, ABG Infralogistics and Advanta lost 7-13%.

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Nifty tanks below 5300 on Indo-Mauritius tax treaty talks

Indian equity benchmarks were taking huge beating post reports that Mauritius government has agreed to revise tax treaty with India. Stocks with investments from Mauritius were witnessing selling pressure.

More than 40% of foreign direct investment In India comes from Mauritius. Lanco Infratech, KS Oils, Jain Irrigation, Delta Corp and Alok Industries were down more than 10-20%.

GTL Infrastructure plunged 43% and GTL tumbled 60% despite clarification from the management on various subjects in an interview with CNBC-TV18. Technology Infra holds 23% stake in GTL Infra. Technology Infra, based out of Mauritius, classified as FDI in GTL Infra's prospectus.

The 30-share BSE Sensex was trading at 17,508, down 362 points and the 50-share NSE Nifty lost 114 points to 5,252.

Neelkanth Mishra, head of Equity Strategy India, Credit Suisse, said that the market may continue to languish and next 3-4 quarters will be sluggish for market.