Europe delays decision on Greece

Euro zone finance ministers kept up intense pressure on Greece on Monday, saying it had to approve tougher austerity measures before a final decision is made on a further 12 billion euros in loans.

Meeting into the early hours of Monday, ministers indicated that the next tranche of EU/IMF aid would be paid by mid-July, allowing Athens to avoid default, but said it was up to Greece to show concrete progress on plans to cut spending, raise taxes and generate other revenue streams first.

"We are waiting for a decision from the Greek parliament. We are calling for not just the government, but the Greek opposition to support the plan," Belgian Finance Minister Didier Reynders said ahead of a second day of meetings in Luxembourg.

Read Full Story: Europe delays decision on Greece, presses Athens to act

Sensex fell 364 points and Nifty dropped 108 points

Indian equity benchmarks were slaughtered on Monday. They saw a sharp drop of 2% on reports that the Mauritius government had agreed to restart talks of revising the double taxation avoidance agreement (DTAA) treaty with India. This triggered margin calls sell-off as well as institutional selling.

Finance Secretary too confirmed that a change in the Indo-Mauritius tax treaty is in the offing. "Mauritius has given its in-principle nod to mull treaty review and we would discuss Mauritius tax treaty in July-August."

"We await Mauritius confirmation on tax treaty review date. We need a framework before levying tax on Mauritius investment and can't arbitrarily tax investment routed from Mauritius," he added. Mauritius government said they would collaborate with the Indian government for all cases.

According to the tax treaty between India and Mauritius, capital gains are to be assessed as per the law of the state of residence of the party. As under the Mauritian law tax is not levied on capital gains, it means capital gains made by a Mauritian entity on its investments in Indian companies’ shares are tax exempt.

DTAA or Double Taxation Avoidance Agreement is a tax treaty that India has with 65 other countries. If NRI is a resident in any of those 65 countries and is paying taxes on the income earned in that country, then he/she is eligible for a lower deduction of tax on income earned in India in that financial year.

BSE Sensex fell 364 points, to close at 17,506 and the 50-share NSE Nifty dropped 108 points, to end at 5,258

Lack of triggers may take Sensex to 16K

The outlook on the Indian market has worsened in the past few months due to macroeconomic concerns, which have been hindering the growth of the economy. Analysts, however, expect the market to recover at least in the second half of the year.

Speaking to CNBC-TV18, Neelkanth Mishra, head of Equity Strategy India, Credit Suisse, said that the market may continue to languish and next 3-4 quarters will be sluggish for market. “ExpectSensex to dip to 16,000 level,” added Mishra.

Nifty recovers after testing 18-week low; Bharti gains

Indian equity benchmarks recovered from early scare, with recouping half of its losses after the Central Board of Direct Taxes (CBDT) came with clarification on Indo-Mauritius tax treaty.

Nifty had plunged to record its lowest level in more than 18 weeks today post the news that India and Mauritius will restart talks on tax treaty.

However, CBDT clarified that government was yet to start talks with Mauritius on tax treaty, reports CNBC-TV18 quoting agencies. CBDT also said Mauritius has expressed willingness to talk three months ago.

Finance Ministry sources told CNBC-TV18 that Mauritius has agreed to talk on tax treaty this March. But there is no development on tax treaty renegotiation. CNBC-TV18 also learnt that there is no time frame yet for treaty and no specific tax provisions identified for renegotiation.

Dow, S&P rise but..........

The Dow and S&P 500 rose on Friday after France and Germany outlined an agreement to aid debt-burdened Greece, but analysts said a recent bearish trend may not be over. The Dow managed to close just above 12,000, but the S&P 500 barely squeaked out a gain for the week after six straight weeks of losses. The uncertainty surrounding a resolution of the debt crisis kept investors wary of committing more cash to equities.
Research In Motion Ltd's US-listed shares sank 21.5% to USD 27.75 in its busiest day of trading in almost six years. The BlackBerry maker's sour results, released late Thursday, pushed the Nasdaq lower and dragged on other top technology names such as Apple Inc, down 1.5% at USD 320.26.