D-St surges 1% on reports govt to cut tax on foreign bond bets

Mumbai: India's equity indices rose over 1% on Thursday as the rupee's rebound from lows following a news report of a likely tax cut on overseas investments in Indian bonds eased nervous sentiment.

NSE's Nifty rose 277 points, or 1.2%, to close at 23,689.6. BSE's Sensex rose 789.74 points, or 1.1%, to end at 75,398.72. Nifty's Pharma, Metal and Financial Services indices were the top performers of the day.

"The market gained primarily because of news reports of the government looking to reduce tax on foreign bond investments and discussion of the opening of the Strait of Hormuz during Trump and Xi Jinping's bilateral talks," said Sham Chandak, head of institutional equities at Elios Financial Services.

The government is considering a significant reduction in the taxes paid by foreign investors on the Indian bonds to attract capital inflows, according a Bloomberg report.

"The proposal considering reducing taxes on foreign investment in domestic bonds is a welcome move that could improve foreign inflows into India and provide support to the falling rupee," said Gaurav Sharma, head of research, Globe Capital Market.

Foreign portfolio investors net bought shares worth ₹187 crore. Domestic institutions were buyers worth ₹684 crore.

Elsewhere in Asia, Japan fell 1%, China declined 1.5%, while Hong Kong remained flat, South Korea gained 1.8%, and Taiwan rose 0.9%. The pan-Europe index Stoxx 600 was up 0.6% at the time of going to print.

At home, the Nifty's Volatility Index or VIX, the street's fear gauge, fell 4.2% to 18.6 levels on Thursday, in response to the market rebound.

Chandak said despite significant gains on the index, the breadth wasn't very encouraging.

"Small and micro-cap indices were flattish. So, one must not read too much into today's market movement," he said.

The Nifty Midcap 150 gained 1.2% while the Nifty Small-cap 250 ended flat. Out of the 4,373 stocks traded on BSE, 2,009 advanced and 2,196 declined on Thursday.

Sharma said the index has support at 23,200-23,400, with a strong hurdle near 23,800.

"A breakout above 23,800 could take the Nifty towards 24,200-24,400. As long as Nifty holds above 23,200, the broader trend remains positive and traders and investors may continue to maintain their bullish positions," he said.