The Indian equity markets opened the day on a firm note. However, the markets slipped into red, soon after the Reserve Bank of India (RBI) announced its bi-monthly policy, keeping the key rates unchanged. In the final hour of trade buying activity intensified pushing the indices well above Monday's closing levels. The BSE-Sensex closed higher by 184 points and the NSE-Nifty closed up by 63 points. The small cap and mid cap stocks were in favour today. The BSE Mid Cap and BSE Small Cap indices closed up by 0.82% and 1.12 % respectively. Barring stocks from capital goods sector, all the sectoral indices witnessed buying interest.
As regards global markets, Asian indices closed mixed today while European indices have opened firm. The rupee was trading at Rs 60.86 to the dollar at the time of writing.
Software stocks have closed the day on a mixed note. While Infosys led the gainers; HCL Technologies was among the leading losers. India's software firms are currently at logger heads with the government regarding the tax treatment of profits earned at special economic zones (SEZs). As per the new interpretation by the central board of direct taxes (CBDT), of Section 10AA of the income tax act, employees of software firms will be considered in the scheme of things when assessing claims of tax exemption in SEZs. The CBDT has interpreted the rules to mean that 80% of the workforce of an IT firm should comprise of new employees, on a yearly basis, to qualify for a tax exemption. IT companies have alleged that this rule only pertains to property and machinery and not to human resources. Under the new interpretation, most IT firms will find it almost impossible to claim tax exemptions on the profits earned at SEZs as it will not be possible to shift employees in and out of these SEZs every year.
Majority of power sector stocks closed the day on a firm note, with JSW Energy, NHPC Ltd and Reliance Infrastructure being the leading gainers in the pack. State-run transmission utility Power Grid Corporation of India Ltd (PGCIL) has announced its results for the quarter ended June 2014. During the quarter, the company's net sales stood at Rs 39,384.2 m, higher by 10.8% YoY. Operating income grew to Rs 33,728.6 m, almost in sync with topline growth. Other income rose sharply by 79.9% YoY to Rs 1,332.6 m. At the bottomline level, net profit grew by 9.2% YoY to Rs 11,365.1 m. Net profit margin contracted marginally from 29.2% in 1QFY14 to 28.8% in 1QFY15.