Market closes lower on General Anti-Avoidance Rule

mumbai: The equity markets slumped on Friday after the government clarified that the controversial General Anti-Avoidance Rule (GAAR), that disallows a tax benefit if it is proved that you entered into an arrangement with the intent of avoiding tax would be applicable from April 2015 as against the earlier decision to implement it from April 2016. Additionally, the growing geo-political tension in West Asia and financial market crisis in Portugal involving one of its largest listed banks also dampened investor sentiments.

After opening the day on a positive note, the Sensex dropped 348.40 points or 1.37 per cent to end the trading session at 25,024.35 while the Nifty ended the day at 7,459.60, loosing 108.15 points or 1.43 per cent.“The markets were in an overbought territory as both the Sensex and Nifty had witnessed a sharp rally in a short span of time. A couple of negative news flows like crisis in West Asia, doubt about financial soundness of a Portuguese bank and the decision to implement GAAR from April 2015, triggered profit booking on the domestic markets,” said Alex Mathew, head of research, Geojit BNP Paribas Financial Services.

“The Nifty has breached its key support level of 7,600 and therefore it could further come down to the 380 level mark during next week,” Mr Mathew added. Overseas investors turned net sellers of domestic equities offloading shares worth Rs348.40 crore, according to the provisional data from the stock exchanges.