Sensex slips to two-month low over tax issues (Roundup)

Mumbai, March 26 (IANS) Indian equities markets closed lower Monday with a benchmark index falling 309 points to a two-month low as traders feared the government was planning to tax foreign institutional investors operating out of Mauritius.

Also of concern was the lack of clarity whether overseas funds buying into Indian equities using participatory notes or P-notes would come under the capital gains tax net.

The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE), which opened at 17,377.59 points, closed at 17,052.78 points, down 308.96 points or 1.78 percent compared to its previous close at 17,361.74 points.

The 50-scrip S&P CNX Nifty of the National Stock Exchange also ended lower at 5,184.25 points, down 93.95 points or 1.78 percent from its previous close.

Broader markets were quiet too with the BSE 500 index closing 1.75 percent down. The BSE midcap index closed 1.6 percent lower, while the BSE small cap index ended 1.4 percent down.

Realty, power and banking sectors fared the worst. All 13 sectoral indices on the BSE closed in the red.

The market breadth was negative with 919 stocks advancing, 1,955 declining and 113 remaining unchanged.

"Markets opened lower today morning and continued to grind lower throughout the day. There were concerns on the taxability of the income of FIIs operating out of Mauritius and also of those operating through P-notes," said Dipen Shah, head of fundamental research, Kotak Securities.

"However, there is no clarity as yet on the final implications of the new rules announced on the budget, we believe. Stocks across sectors fell and the advance:decline ratio was significantly tilted towards the decliners. The year-end considerations and the futures and options expiry on Thursday also lent some degree of weakness to the markets in our view," added Shah.

All 30 scrips on the Sensex closed in the red. Prominent losers included ICICI Bank, down 4.3 percent at Rs.871.85; RIL, down 1.91 percent at Rs.729.80; TCS, down 1.76 percent at Rs.1,163.80 and HDFC, down 1.5 percent at Rs.650.75.

Asian markets were sombre as traders considered the chances of a global economic slowdown. Data from China and Europe last week had pointed to a slump in their respective economies.

The Japanese Nikkei index closed flat at 10,018.24 points.

Hong Kong's index too ended lacklustre at 20,668.86 points, while the Chinese Shanghai Composite index edged up 0.05 percent at 2,350.6 points.

European markets were trading quiet.

Britain's FTSE 100 was up 0.45 percent at 5,881.47 points, while the German DAX was trading 0.59 percent higher at 7,036.9 points.

The French CAC 40 was ruling 0.08 percent up at 3,478.79 points.

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