Nifty bounces back

Indian equity benchmarks bounced back on Tuesday morning - theNifty was inching towards the 5300 level, on the back of stability in global market and after clarification from government on Indo-Mauritius tax treaty. Market had fallen for previous four sessions.

Reliance Communications, Reliance Infrastructure, Reliance Industries, Bharti Airtel, Cairn India, Tata Motors, Sesa Goa, Sterlite Industries, SAIL, DLF and L&T were leading the markets higher.

However, ONGC fell 2%. Cipla, Ranbaxy Labs, Grasim and Ambuja Cements too were on sellers' radar.

At 9:20, the BSE Sensex was trading at 17,620, up 114 points and the 50-share NSE Nifty went up 34 points to 5,292 amid volatility.

Stocks to watch for today

Aditya Birla Nuvo has seen good investor interest after it announced its results which saw its net profit increase by two-folds. The stock on Monday, witnessed selling along with the rest of the market, however, during the second half of the day there was buying in the stock, which helped it close near the high of the day. The stock has a potential of reaching Rs 920, if it can cross the high of Monday of Rs 869.

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Keep a watch on these stocks today. Reuters

GT Offshore has touched the previous low of Rs 205, from which it has rebounded twice. This time the stock has fallen on lower volume, though Monday’s fall was of over 5%. This time too the level of Rs 205 might hold and the stock can bounce back to Rs 225.
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Hindustan Unilever was among the few frontline stocks that closed in the positive zone. The stock is close to its all time high having moved on good volume to Rs 322.55. The stock can touch a new high and touch the Rs 350 levels.
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The low of Rs 1,040 has been held for the last three days by PNB. In the case of a bounce back the stock can move up to Rs 1,100 levels at which it has been consolidating for sometime.
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Though Voltas broke through its support level of Rs 160.50 and touched Rs 157 on Monday, the stock bounced back strongly to close the day at Rs 161.15. The stock can move up to Rs 170 as the fall on Monday was on much lower volume.
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JP Associates continues its fall in line with the market. However, it has now taken support at  its previous low of Rs 78.40. The pattern continues to be bearish and the chances are that a low of Rs 70 can be touched by the stock.
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Bank of Baroda saw good buying during the closing hours of Monday, which helped the stock close at Rs 858.15, only 0.16% lower than the previous close on Friday. The stock can touch Rs 900 if it is able to cross the high of Rs 865 it made on Monday.
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We have a buy call on Hero Honda above Rs 1,755, which fell short of the trigger. However, the stock continues to show some strength. We will maintain our call as it has held on to the price with a target of Rs 1,825.
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Our sell call on REC continues which was triggered below Rs 191.The stock touched a low of Rs 181.20 on Monday, we maintain our price target of Rs 175 for the stock.
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US markets end higher

The US markets finished higher amidst thin trading as fears over Greece's debt crisis subsided and investors snapped up beaten-down stocks.

Dow Jones Industrial Average was up 0.63% or 76.02 points at 12080.38. Nasdaq Composite was up 0.5% or 13.18 points at 2629.66. Standard & Poor's 500 was up 0.54% or 6.86 points at 1278.36.

In economic data to watch out for, existing home sales for May is expected to fall to 4.75 million as compared to 5.05 million in April.

Meanwhile, the FOMC meeting commences today as the US Federal Reserve determines the direction of the monetary policy. The minutes of the meeting would bee keenly watched as the QE2 comes to an end.

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