Strength continues in the market; rate sensitive stocks rally

Indian equity benchmarks extended early gains and currently trading near high point of the day amid sustained buying in several large, medium and small cap stocks.  However some strong economic data from the US and expectations of a solution to the euro zone debt crisis following leaders of Germany and France urging Greece to speed up rescue plans appear to be prompting investors to indulge in some hectic buying this morning. In currency market, rupee appreciated due to debt-related inflows from foreign institutional and currently trading at 52.24 to the dollar, up by 27 paise. On sectoral front, all sectors were trading in green. Bank, realty and automobile stocks were in demand amid expectations of a rate cut from the central bank. Several stocks from capital goods, metal, oil and power sectors too have rallied sharply on strong buying support. On global front, Asian markets were also trading with notable gains. Back home, the market breadth remained positive.

The BSE Sensex is currently trading at 16,090.92, up by 276.20 points or 1.75%. The index has touched a high and a low of 16,091.66 and 15,898.32 respectively. All the 30 stocks were trading in green on the index.

The broader indices were outperforming the benchmarks; the BSE Mid cap index was up by 1.87% while the small cap index was trading up by 2.21%.

All the sectoral indices on the BSE were in green, the top performing ones were Realty up by 2.75%, Auto up by 2.52%, Bankex up by 2.49%, Capital Goods (CG) up by 2.46% and Metal up by 2.16%.

The complete set of 30 scrips on the Sensex was in green, top among them were, M&M up by 4.00%, SBI up by 3.27%, Hindalco Industries up by 3.05%, ICICI Bank up by 2.92% and BHEL up by 2.88%.

Meanwhile, another hurdle in the implementation of Goods and Services Tax (GST) seems to have cleared as the Empowered Committee of State's finance ministers on GST gave an in-principle approval to the concept paper of taxation of services based on the negative list. Though there still remain some disagreements between the Central government and the states, however, the committee reached consensus on a negative list on which there will be no central tax.

The Union Government can now fast track the process of GST and implement it from April 1, 2012, which would subsume all Central and state taxes and levies into uniform system of taxation, provided it first resolves the disagreements with states. The existing practice of having a positive list where about 120 items are taxed is likely to be replaced by the negative list prepared by state finance ministers and many more services would be brought under the purview of tax regime, which will help in further widening the tax base.

Deputy Chief Minister of Bihar, Sushil Kumar Modi who chaired the committee has recommended that all those items mentioned in the Constitution's schedule II should be included in the negative list so that Union Government cannot impose tax on them. The empowered committee also deliberated on defining services and felt that all kinds of economic activities barring goods, money and immovable property should be considered as part of the services.

While the matter related to implementation of the proposed GST regime is pending with the Standing Committee of the Finance Ministry and States like Uttar Pradesh, Tamil Nadu, Madhya Pradesh and Gujarat among others have major objections to its introduction. As part of an earlier move towards GST regime, the states have estimated a loss of Rs 19,000 crore in revenues after the Central Sales Tax (CST) was reduced. The negative list will include services such as funeral, burial and mortuary agencies, interest paid on deposits by bank, dividend on investments, and passenger travel in public transport among others.

The S&P CNX Nifty is currently trading at 4,828.95, up by 86.15 points or 1.82%. The index has touched a high and a low of 4,829.60 and 4,768.25 respectively. There were 48 stocks advancing against 2 declines on the index.

The top gainers of the Nifty were Reliance Infra up by 4.44%, Axis Bank up by 4.15%, M&M up by 4.10%, SBI up by 3.41% and Hindalco up by 3.22%.

On the flip side, Grasim down by 0.54% and Ranbaxy down by 0.53% were the only losers on the index.

Most of the Asian equity indices were trading with good gains, Shanghai Composite was up by 2.19%, Hang Seng gained 1.04%, Jakarta Composite was up by 0.43%, Nikkei 225 was up by 0.38%, Straits Times was trading higher by 0.88%, Seoul Composite surged by 1.46% and Taiwan Weighted was up by 1.21%.