Fearing capital gains tax on investment through Mauritius after India signed the Double Taxation Avoidance Agreements (DTAA) treaty with Mauritius on Tuesday, the BSE benchmark Sensex on Wednesday retreated from a two-week high after falling 175.51 points to 25,597.02.
Also, ahead of macroeconomic data IIP numbers for March and consumer price index (CPI) for April, which is slated to be released on Thursday, investors are in panic that equity inflows may take a hit on India’s such move in the stock markets. Retail participation, however, was positive with the BSE mid-cap rising 0.17 per cent and small cap index falling by a marginal 0.03 per cent.
The Sensex, after opening down at 25,548.97 slid to a low of 25,409.24. However, value-buying in several bluechips helped trim losses and the index finally settled 175.51 points or 0.68 per cent lower at 25,597.02. The gauge had gained 544 points in the past two sessions. “The apprehension over tax on capital gains made through P-Notes (Mauritius) has negatively impacted the market. The short-term investments from FIIs may get hurt in the near- term,” said Vinod Nair Head of Research at Geojit BNP Paribas Financial Services.