After starting the day in the positive, the benchmark indices today succumbed to profit booking by the end of the session. The Indian stock market finally, ended its 6 day rally by closing in the red. The BSE-Sensex
closed lower by around 83 points (down 0.4%) whereas the NSE-Nifty closed around 20 points lower (down 0.4%). The BSE Midcap and BSE Small cap indices however bucked the trend and closed higher by 0.7% and 0.8% respectively.
Most Asian indices also closed strong today, with the exception of India and China. Europe is currently trading positive, with some resolution in the Greek debt crisis. The rupee was trading at Rs 44.53 to the dollar at the time of writing.
The auto sector had a very bumpy ride in June as higher interest rates and fuel costs hit volumes. Maruti Suzuki's overall sales saw a sharp 9% fall YoY (year on year) in June 2011 on the back of workers' strike in Manesar and maintenance shut down at its Gurgaon plant. Volumes plummeted from 80,298 units versus 88,091 units in June 2010.On a month on month basis (i.e. from May 2011) the fall was even steeper, with the top car maker seeing a 23% dip in total sales.
Tata Motors also reported dismal sales figures. It reported a 0.7% decline in total sales in June 2011 to 66,358 units from 66,824 in June 2010. However its' commercial vehicle (CV) segment did not see any big slowdown, which saw a 13% growth. On the other hand, Mahindra & Mahindra (M&M) reported a buoyant increase in sales. It saw a 29% increase in total sales in June 2011 at 35,584 units (27,562 units previously).
As per leading financial daily, Tata Consultancy Services (TCS), India's largest software company by sales, is getting scrutinized by the income tax (I-T) department for claiming tax benefits for its onshore services. This is not the first time I-T department has regarded offshore services provided by Indian companies as an export of manpower, called as body shopping. Earlier other software majors such as Infosys, Wipro received notices from the I-T department on the same. As per the department, software companies are booking profits from their onshore services in the Software Technology Parks of India (STPI) units to avail of the tax benefits. Whereas to claim such benefits, one needs to look at the service contracts to determine what falls within the STPI preview. The argument that comes from the tax department is that the onshore services of these companies are in the form of export of manpower rather than software, hence they should not be able to claim benefits on the same. TCS refrained from commenting on tax related issues.