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Market recovers early losses, ends flat

Market recovers early losses, ends flat
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First Published: Tue, Apr 10 2007. 05 21 PM IST
Updated: Tue, Apr 10 2007. 05 21 PM IST
Bloomberg
The Bombay Stock Exchange’s sensitive index rose for a fifth day. ITC Ltd., the nation’s biggest cigarette maker, climbed after Macquarie Securities rated the stock a new “outperform” saying concerns over a tax levy were overdone.
Infosys Technologies Ltd. led software developers lower on concern they may announce a lower guidance for the year ending March 2008.
The Bombay Stock Exchange’s Sensex added 11.80, or 0.1% to 13,189.54. The S&P/CNX Nifty Index on the National Stock Exchange climbed 4.65, or 0.1%, to 3848.15.
ITC gained Rs4.5, or 2.9%, to 159.85. Macquarie said it expects ITC to pass on some of the additional taxes to consumers over the next two months.
“We forecast a repeat performance of 2002, when ITC was able to pass on a 17 percent effective tax hike over 18 months to 24 months,” analyst Unmesh Sharma said in a note to clients late on 9 April. Sharma expects an initial price increase of up to 10% for ITC’s higher-priced brands.
Macquarie set a share price estimate of Rs195, 26% higher than 9 April’s closing price.
West Bengal Finance Minister Asim Dasgupta on March 16 proposed a value-added tax of 12.5% on tobacco and tobacco products in his budget for the year started April 1, according to the state government’s Web site.
Last month, the federal government implemented the Taxation Laws (Amendment) Law that allows the phasing out of central sales tax. The law includes changes in the Additional Duties of Excise (Goods of Special Importance) Act 1957, which proposes to exclude tobacco, enabling states to levy the tax.
Guidance Concerns
Infosys, the nation’s second-largest software exporter, fell Rs45.9, or 2.3%, to 1,998.1. The company reports its fourth-quarter earnings on 13 April. Tata Consultancy, India’s largest computer-services provider, slid Rs19.65, or 1.6 %, to 1,196.95.
Wipro Ltd., India’s third-largest software exporter, declined Rs13.55, or 2.4% , to 548.25. Satyam Computer Services Ltd., India’s fourth-biggest computer-services provider, dropped Rs16.3 , or 3.5%, to 445.35.
“Software stocks will be under pressure till the results are announced,” said R.K. Gupta, who oversees $68 million of assets at Credit Capital Asset Management in New Delhi. “Investors will look to see if the guidance for the year is lower on account of the stronger rupee.”
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First Published: Tue, Apr 10 2007. 05 21 PM IST
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