Sensex sinks 2.33% and 395 points to close at 16518 at 3.30 pm,although the adjusted close is down 366 points at 16546…..retracing all it’s misplaced elation yesterday on deferment of General Anti Avoidance Rules (GAAR)
Yesterday the Sensex showed a remarkable bounceback from negative to positive to close near 17000 at 16913 just because FM Pranab Mukherjee announced that he was deferring the GAAR by a Year and putting the onus on the IT Authorities to prove tax avoidance
It was like the FM warning FIIs and those who misuse Double Taxation Avoidance Agreements (DTAA)
” Alright I won’t kill you’ll this year but will do so next year !”
…and the Market responded by applauding this lease of Life for a year more !…pretty misplaced
India has DTAAs with 82 countries….Without hiding behind any DTAA,especially with the one with Mauritius coming under Review,FIIs are now exposed….having to lose their tax advantage which acted as a strong cushion given they had to contend with the Rupee Depreciation too
Today reality sunk in and the whole bounce back was retraced back to 16500 levels…helped along also by Deputy Governor of RBI stating that with Oil Prices & Inflationary Pressures remaining high,it would be difficult to lower Interest rates further
All 30 Sensex Stocks closed in the Red with those highlighted in Bold Red Below being the hardest hit and interestingly all favourites too…and that’s an ominous sign for further falls
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The May Meltdown is On… !