Market likely to see gap-down opening on Mauritius tax treaty

Indian equities indices erased initial losses to jump for a second straight session as drugmakers and engineering companies climbed amid advances in global equities. The Sensex rose 0.33%, or 83.67 points, to close at 25,772.53 points after Monday’s 1.8% advance; and the Nifty 50 index closed 0.28%, or 21.75 points, higher at 7,887.80.  On the broader markets front, the BSE Mid-cap index rose 0.20% and Small-cap gained 0.11%.

India will start imposing capital gains tax on investments coming from Mauritius, starting next year, after the two countries agreed to amend a three-decade old treaty that brought in billions of dollars in investment but was suspected of abetting tax evasion. In a two-year transition phase, from April 1, 2017 to March 31, 2019, the capital gains will be taxed at a concessional tax rate of 50 per cent of the domestic rate, according to the statement. Capital gains on investments made before April 1, 2017, will not be taxed in India.

U.S. stock indices traded higher on Tuesday as gains in the Basic Materials, Oil & Gas and Industrials sectors led the bandwagon. The Dow Jones Industrial Average has surged 222.44 points, or 1.3%, to 17,928.35. The S&P 500 index added 25.70 points, or 1.3%, to 2,084.39. Meanwhile, the Nasdaq Composite Index climbed 59.67 points, or 1.3%, to 4,809.88, its biggest one-day gain in a month.

Oil prices rose Tuesday on expectations that supply outages from Canada to Nigeria would help to alleviate the global glut of crude. WTI crude oil settled up USD 1.22, or 2.8%, to USD 44.66 a barrel and Brent rose USD 1.89, or 4.3%, to USD 45.52 a barrel.

European equities ended higher on Tuesday, as sentiment was lifted by a handful of positive earnings and a sharp tick-up in commodity stocks and prices. The pan-European STOXX 600 finished up 0.9%, Britain's FTSE 100 and Germany's DAX both posted gains of 0.6% to 0.7% by the close, while France's CAC closed up 0.4%.

Mostly Asian markets opened higher in early trade on Wednesday following advances in US stock market overnight due to weakness in the yen against the dollar and gains in oil prices. In Japan, the Nikkei 225 added 0.29% while South Korea’s Kospi index slid 0.51%. Australia’s S&P/ASX 200 Index traded up 0.54%. New Zealand’s S&P/NZX 50 Index is up 0.34%. China’s Shanghai composite has been lowered by 0.22%.

On the domestic front, A SGX Nifty 50 index future for May series is trading down by 118 points at 7,801.50. Indian markets are likely to open gap down due to government's move to tax Mauritius investments. Investors will be keeping an eye on Apollo Tyres, Asian Paints, Havells and Kotak Bank results due for release today.