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Markets stabilise on Finance Ministry's move

The prompt intervention of the Union Finance Ministry into the ongoing controversy over the reported action by the Income Tax authorities against the Mauritius-based foreign institutional investors, or FIIs, today arrested the free fall of share prices on the leading bourses.

The National and Bombay stock exchanges witnessed an immediate comeback in early hours with several pivotals maintaining steady trend, notwithstanding the fact that the US-based NASDAQ continued to suffer bear hammering on infotech scrips.

The market was overtaken by a series of negative factors. The 350-point fall at NASDAQ on Monday, the Rs 90-million Income Tax demand on a few FIIs, and the court ruling against Microsoft, created a bloodbath on the Indian bourses yesterday.

However, the Finance Ministry's directive, to order suspension of all action against the Mauritius-based FIIs, gave a relief to the market players in the stock markets with the major indices registering moderate recovery from their previous levels.

The Bombay Stock Exchange's Sensitive Index, the Sensex, opened on a steady note and surpassed the 4800-mark immediately to touch the day's high of 4819 points and closed at 4779 points, higher by 68 points from the previous close of 4691 points.

The S&P CNX Nifty index at the National Stock Exchange opened at 1428.50 points, and closed at 1433 points up by 5 points.

"Due to the doubts prevailing over the likely impact on investors from Mauritius, the Central Board of Direct Taxes has directed field authorities that all action against Mauritius-based FIIs be put on hold, pending a detailed examination of the grounds on which the tax benefits have not been allowed to some companies," the Finance Ministry said today.

"This should completely remove the current apprehensions," the statement said.

UNI

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