Equity markets sustain the rally; Nifty gyrates above 5250 level

Equity markets continue to gyrate near the intra-day high level on sustained across the buying momentum largely on the back of the stocks belonging from the Oil & Gas, Bankex and Auto counters. Capitalizing on global risk-on sentiment, benchmark equity indices shot higher to four week’s high level as better than than-expected jobs data which soothed worries over sluggish growth in the world’s largest economy, US got the markets going. Meanwhile, regional counterparts also trading optimistic on rising expectations of European action to tackle the debt crisis, added fuel to the rally. However, negative European markets opening could provide a cap to the massive gains of the bourses, going forward in the day.

Closer home, 30 share index, Sensex, adding over 200 points is currently oscillating above the 17400 mark, while the 50 share index, Nifty, on NSE, is currently trading above the 5250 crucial level. The broader indices too have amassed gains, but in a magnitude lower than the frontline indices. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1644:893, while 122 shares remained unchanged.

The BSE Sensex is currently trading at 17,421.11, up by 223.18 points or 1.30% after touching a high of 17,448.42 and a low of 17,313.05. There were 25 stocks advancing against 5 declines on the index, while one remained unchanged.

The broader indices continued to trade in fine fettle; the BSE Mid cap index and Small cap index was trading higher by 1.09% and 1.21% respectively.

The top gainers on the BSE sectoral space were, Oil & Gas up by 2.68%, Bankex up by 1.63%, Auto up by 1.55%, Capital Goods up by 1.54% and Realty up by 1.51%, while Fast Moving Consumer Goods down by 0.07% was the lone loser on the index.

RIL up by 4.80%, Tata Motors up by 3.19%, Tata Steel up by 2.47%, L&T up by 2.21% and ICICI Bank up by 2.05% were major gainers on the Sensex, while TCS down by 0.56%, Dr Reddys Lab down by 0.54%, ITC down by 0.35%, Coal India down by 0.26% and Hindustan Unilever down by 0.11% were major losers on the index.

Meanwhile, blaming the current guidelines being subjective and prone to misuse, the Confederation of Indian Industry (CII) has strongly resented the introduction of the controversial General Anti-Avoidance Rules (GAAR) in the current business environment. In the representation on the draft guidelines, which would be submitted to the government on August 7, the apex business chamber opines that this is not the right time to introduce GAAR in the Income Tax Act, and only after the government can assure a transparent, non-corrupt and fair tax administration should GAAR be introduced. Highlighting the need to invite foreign capital into India to bring growth back to our country, the industry body has further suggested GAAR to be deferred to April 1, 2018, if not being completely set aside.

Both foreign as well as domestic investors have been in a tizzy ever since the introduction of GAAR, in mid-March as part of the budget for fiscal 2013. However, the chamber in order to revive investor confidence in India, suggested that GAAR should avoid overriding tax treaties except in rare cases, and only after an independent, high-powered committee constituted for the purpose has given its consent. The industry body also wants adequate safeguards to ensure that GAAR is not used as a tool only for checking tax avoidance & evasion and not collecting additional tax.

In a recent development for fine tuning the controversial GAAR policy, Prime Minister-appointed expert committee initiated the consultation process with various stakeholders to usher in greater clarity and transparency in the draft norms.

Earlier this month, Prime Minister Manmohan Singh appointed a four-member committee headed by noted economist and tax expert Parthasarathi Shome to rework on GAAR. A new panel led former adviser to the finance minister during P Chidambaram’s tenure between 2004 and 2008, will prepare a road map on GAAR by September 30.  The Shome committee after reading and vetting the responses to the draft guidelines that the finance ministry has put out on June 28, will draft second GAAR guidelines by August 31, which would be submitted along with its road map for implementation by the end of September.

The S&P CNX Nifty is currently trading at 5273.60, up by 57.90 points or 1.11% after trading in a range of 5,291.35 and 5,260.85. There were 41 stocks advancing against 9 declines on the index.

The top gainers on the Nifty were Reliance up by 4.64%, Tata Motors up by 2.96%, JP Associates up by 2.73%, Reliance Infra up by 2.71% and Axis Bank up by 2.38%. While, BPCL down by 1.54%, Dr Reddy down by 0.80%, TCS down by 0.72%, Coal India down by 0.54% and Wipro down by 0.42% were top losers on the index.

All the Asian indices were trading in green; Kospi Composite Index up 2.01%, Jakarta Composite added 0.55%, Hang Seng index surged 1.84%, Straits Times up by 0.90%, KLSE Composite added 0.29%, Taiwan Weighted shot higher by 0.95%, Nikkei 225 soared 2.00% and Shanghai Composite jumped by 1.05%.

European markets got off to a cautious start; BEL 20 declined by 0.31%, CAC 40 edged lower by0.31% and FTSE 100 slid 0.24%.