With investors taking fresh positions after persistent selling last month, the BSE benchmark Sensex on Monday soared by 479 points on across-the-board buying support. The government’s clarification on minimum alternate tax (MAT), rise in auto stocks on promising monthly sales data, two mega retail mergers, buying at the beginning of May series and the passing of Finance Bill, 2015, helped the index to rise the most in over a month.
The Sensex resumed higher at 27,204.63 and shot up further to a high of 27,537.85 before ending at 27,490.59, registering a rise of 479.28 points or 1.77 per cent. The 50-share NSE Nifty recaptured the 8,300-level to hit a high of 8,346.00 points, before settling 150.45 points or 1.84 per cent higher at 8,331.95. This is the best single-day gain in two months for the index.
Dipen Shah, head of Private Client Group Research, Kotak Securities, said, “Markets bounced back strongly after falling nearly 10 per cent over the past few weeks on concerns relating to MAT on foreign institutional investors (FIIs), poor quarterly results and forecasts of a sub-par monsoon. Bargain-hunting led to sharp gains in various stocks across sectors. The retail stocks were in focus after deals involving the Aditya Birla Group, Future Group and Bharti Retail.”
The Bombay Stock Exchange (BSE) market capitalisation regained Rs 100 lakh crore level following gains in stocks like ONGC, RIL and Infosys. The indices had come close to a four-month low in the last trading session on Thursday amid persistent taxation concerns faced by foreign investors.
Finance minister Arun Jaitley in Parliament on Thursday clarified that MAT will not apply to capital gains on the sale of securities, royalty, technical service fees and interest income. Although the tax department has issued demand notices to the tune of Rs 6,500-7,000 crore to foreign investors, the amount is far lower than the Rs 38,000-45,000 crore estimated earlier.
Brokers also attributed Monday’s rally to value-buying from an “over-sold” position after persistent fall in stock prices in the April series as participants snapped recently beaten down blue-chip stocks. “Going ahead, markets will focus on the Parliament proceedings, where the Constitutional Amendment Bill for goods and services tax (GST) is to be taken up on Tuesday. With the debt-repayment date approaching, Greece will be also a point of focus for the markets. The remaining quarterly results and the accompanying management commentaries will lead to impact on the respective stocks,” said a dealer.