GAARbled…lack of clarity!

More important than the quest for certainty is the quest for clarity- Francois Gautier. Concerns and confusion surrounding the proposed GAAR norms for FIIs spooked the sentiment in the Indian market on Monday. Market players are looking for clarity on whether FIIs coming through Mauritius and those investing via Participatory Notes will be taxed from April 1 under the so-called GAAR. The undertone will remain a wee bit nervous till the mandarins in the Finance Ministry clarify on this matter. The opening today looks opposite of what we saw on Monday. A good start is in the offing thanks to the overnight bounce on Wall Street. Dovish remarks from Fed chairman Ben Bernanke about the US economy and monetary policy lifted Wall Street. European markets gained on reports that Germany is prepared to boost the financial firewall to prevent a debt contagion. Positive data on German business confidence also helped. Most Asian benchmarks are trading higher this morning, spurred by Bernanke's comments. South Korea's consumer confidence rose to the highest level in four months. The dollar is under some pressure following Bernanke's statements. Meanwhile, the rupee had a fresh fall and could remain under pressure. The release of the Government’s borrowing calendar for H1 FY13 could have a bearing on the markets. Liquidity remains fairly tight. So, any indication from the RBI on OMOs could sooth the bond market. The Nifty succumbed to fresh bout of selling on back on concerns about new GAAR policy on FII trades. It closed marginally above the important support of 200 DMA. A move past 5230 could potentially see the index retest the resistance zone of 5390 in the coming days. Trend in FII flows: The FIIs were net sellers of Rs 1.35bn in the cash segment on Monday while the domestic institutional investors (DIIs) were net sellers of Rs 2bn, as per the provisional figures released by the NSE. The FIIs were net sellers of Rs 9.52bn in the F&O segment on Monday, according to the provisional NSE data. Global Data Watch today: Germany Gfk consumer confidence, US home price index by S&P/Case-Shiller, US consumer confidence, Federal Reserve Chairman Ben Bernanke's speech, Richmond Fed Manufacturing Index (March), Fed's William Dudley speech and Fed's Fisher's speech.