Indian shares gain

Indian shares rose 1.2 percent on Tuesday, led by short covering ahead of expiry of the March derivatives series, after reports that the government would not target the so-called participatory notes in a blanket manner under its newly proposed rules targeting tax avoidance.
Television channels, citing unnamed finance ministry officials, said that only participatory notes, or P-Notes, which fail certain regulatory tests may be subject to taxation. There are still worries, however, that foreign investors would refrain from issuing fresh P-Notes on Indian stocks, pending further clarification from the government.
"Conditions put up means tax men can tax it, more clarification is still required to soothe FII nerves," said Sandeep J Shah, CEO of Sampriti Capital. P-Notes are issued by foreign portfolio investors registered with the Indian market regulator, or by their sub-accounts, to investors overseas and they offer the buyer anonymity.
Finance Minister Pranab Mukherjee in his budget presented on March 16 for the year starting on April 1 proposed to introduce the General Anti-Avoidance Rule in order to "counter aggressive tax avoidance schemes." He said it would be ensured it was used in appropriate cases. The gains in the benchmark index were mainly supported by fast moving consumer goods and IT stocks on hopes of price hikes and better pricing power in the January-March quarter respectively.
Among the major gainers, Infosys ended 1.59 percent higher, while ITC rose 1.5 percent and Hindustan Unilever 3.15 percent. The main 30-share BSE index rose 1.2 percent to 17,257.36 points, while the 50-share Nifty index rose 1.14 percent to 5,243.15 points.
"Today's rally is more of a psychological rally on TV reports," said Jagannadham Thunuguntla, head of research, SMC Investments and Advisors Ltd. Auto major Maruti Suzuki ended down 1.83 percent and Mahindra and Mahindra closed flat on Maharashtra state's proposed 2-4 percent hike in tax on petrol and diesel vehicles. Shree Renuka Sugars ended 2.13 percent up and Bajaj Hindusthan closed 1.8 percent higher.