GAAR deferral hopes lift markets higher

Key benchmarks bounced back on Monday’s morning trade on hopes that General Anti Avoidance Rules (GAAR) may be deferred by three years. Asian counters were also lending strong support to domestic counters as all the Asian peers were trading in the green after a contraction in China's manufacturing boosted expectations of more stimulus for the world's second-biggest economy. Moreover, the US markets surged on Friday after the comments of Federal Reserve chief, raising hopes that there might be some announcements in the upcoming FOMC meeting. Back home, BSE’s -- Sensex -- and NSE’s -- Nifty - inching towards their crucial, 17,500 and 5,300 mark respectively, supported by most of the index heavyweights along with broader indices. The sentiments also remained jovial after the Shome committee recommended the postponement of GAAR provisions by three years. It also recommended the abolishment of capital gains tax on transfer of securities.

On sectoral front, auto witnessed the maximum gain in trade followed by metal and public sector undertaking while, healthcare, oil and gas and fast moving consumer goods remained the few losers on the BSE sectoral space. Meanwhile, Auto space remained the top gainer after companies like Bajaj Auto, M&M and Tata Motors reported decent August sales figure. Broader indices were outperforming benchmarks. The market breadth on the BSE was positive; there were 1,016 shares on the gaining side against 478 shares on the losing side while 63 shares remained unchanged.  The BSE Sensex opened at 17,465.60; about 39 points higher compared to its previous closing of 17,429.56, and has touched a high and a low of 17,509.99 and 17,445.78 respectively.

The index is currently trading at 17,496.16, up by 66.60 points or 0.38%. There were 23 stocks advancing against 7 declines on the index.

The overall market breadth has made a strong start with 65.25% stocks advancing against 30.70% declines. The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices surged 0.63% and 0.61% respectively.

The top gaining sectoral indices on the BSE were, Auto up by 1.24%, Metal up by 0.90%, PSU up by 0.84%, Power up by 0.84% and Realty up by 0.82% while, HC down by 0.14%, Oil and Gas down by 0.10% and FMCG down by 0.08% remained the few losers on the index.

The top gainers on the Sensex were Tata Motors up by 2.25%, Bajaj Auto up by 2.14%, Hindalco up by 1.88%, Sterlite Industries up by 1.61% and NTPC up by 1.43%.

On the flip side, HUL was down by 1.01%, RIL was down by 0.84%, Hero MotoCorp was down by 0.71%, Wipro was down by 0.58% and Dr Reddy was down by 0.55% were the top losers on the Sensex.

Meanwhile, with crumbled growth in production of crude oil, natural gas and fertilizers, along with a sharp decline in steel, cement and electricity production, the growth of eight core sector industries dipped to 1.8% in July, posting the lowest growth since last nine months, while the key infrastructure industries registered 8.2% growth in July in previous year.

The natural gas and crude oil production contracted by 13.5% and 0.7%, respectively in July, albeit,  fertilizer output also pummeled by 2.2% in the month under review. The steel and coal production slowed to 4.5% and 2.1%, respectively. While, cement, petroleum refinery and electricity output slowed to 3.8%, 3.6% and 2.2% against 13%, 3.7% and 13%, respectively.

The eight core industries have a combined weight of 37.90% in the Index of Industrial Production (IIP). The combined index was 147.3 in June 2012 with a growth rate of 1.8% compared to an 8.2% growth in July 2011.

The S&P CNX Nifty opened at 5,276.50; about 18 points higher compared to its previous closing of 5,258.50, and has touched a high and a low of 5,295.80 and 5,275.75 respectively.

The index is currently trading at 5,292.15, higher by 33.65 points or 0.64%. There were 43 stocks advancing against 7 declines on the index.

The top gainers of the Nifty were Tata Motors up by 2.03%, Bajaj Auto up by 2.02%, DLF up by 1.72%, Hindalco up by 1.69% and IDFC Industries up by 1.64%.

On the flip side, BPCL down by 0.99%, Ambuja Cement down by 0.65%, HUL down by 0.58%, HDFC down by 0.35% and Dr Reddy down by 0.20%, were the major losers on the index.

All the Asian markets were trading in the green; Shanghai Composite was up by 14.62 points or 0.71% to 2,062.14, Hang Seng was up by 78.92 points or 0.41% to 19,561.49, Jakarta Composite was marginally up by 2.61 points or 0.07% to 4,064.26, KLSE Composite has gained 8.01 points or 0.50% 1,654.36, and Kospi Composite was up by 8.96 points or 0.47% to 1,913.81, Taiwan Weighted was up by 54.14 points or 0.73% to 7,451.01, Nikkei 225 up by 3.63 points or 0.04% to 8,843.54 and Straits Times up by 0.25 points or 0.01% to 3,025.71.