Sensex slips...Ignores cues on GAAR deferment

The frontline Indian equity benchmarks started off the new trading week on a negative note, extending losses from the previous session. The NSE Nifty ended just above the 5250 mark amid selling pressure in Realty, Oil & Gas and Banking stocks. The Indian markets opened with a positive gap after the Government deferred GAAR rollout by three years. A high-level panel has also recommended abolition of capital gains tax to attract long-term foreign capital. GAAR, along with retrospective amendment to tax laws, was one of the big negatives of the Budget. The frontline Indian equity benchmarks turned choppy in the afternoon after a positive start. The main indices hit a day's high in early morning trade before slipping to a day's low in the early afternoon trade. The BSE Sensex and the NSE Nifty struggled for direction while the broader indices retreated from their intraday peaks. The BSE Sensex ended at 17,384, down by 45 points or 0.26% over the previous close. It had earlier touched a day’s high of 17,510 and a day’s low of 17,349. It opened at 17,465. The NSE Nifty settled at 5254, down 5 points over the previous close. It touched a day’s low of 5,243 and a day’s high of 5,295. SAIL, Tata Power, Jindal Steel, IDFC, Ambuja Cement, GAIL, Tata Motors, Siemens and Axis Bank were among the notable losers in the Sensex and the Nifty. Ranbaxy, Coal India, Bajaj Auto, Maruti, Hero Motocorp, HCL Tech and BPCL were the top gainers in the Sensex and the Nifty. The INDIA VIX on NSE ended flat at 17.28. It hit a day’s high of 17.50 and a day’s low of 16.86. The market breadth on the BSE was positive, with 1424 stocks ending higher and 1392 stocks closing lower. In broader market action, the BSE Mid-Cap and BSE Small-Cap indices too gave up their gains and ended absolutely flat. Among the sectoral indices there were few gainers. Capital Goods and Consumer Durables were the higher gainers, up 0.6% each followed by Auto and Power. Meanwhile, Realty topped the list of laggards and lost nearly 0.9%. It was followed by Oil & Gas, Bankex, Metals and Pharma. Teck, IT, FMCG and PSU were subdued. On the BSE 500 index, Bilcare, Bajaj Corp, Aurobindo Pharma, Jindal Polyfilms, S Mobility, Exide Inds, REI Agro, Shree Renuka Sugars, Muthoot Finance and Rashtriya Chemicals and Fertilizers were the leading stocks. Meanwhile, KGN Enterprises, Jubilant Life Sciences, TVS Motor, Network 18 Media, Piramal Healthcare and TV 18 Broadcast were the laggards. "Investors are still hoping that the UPA II will muster some courage and launch pending reforms in order to stimulate a slowing economy and restore investor confidence. Lack of material progress on reforms may keep a lid on the Indian markets going forward. FII inflows this year have crossed US$12bn, including more than US$1bn in August. Foreign portfolio capital flows may remain positive, as India still represents among the better markets for investments amid a worldwide slowdown. In fact, India is the best-performing market this year in Asia," says Amar Ambani, Head of Research, IIFL. Another positive trigger for global equities is the increasing probability of the US Federal Reserve introducing more stimulus measures to shore up growth in the world's largest economy ahead of this year's Presidential elections. Fed Chairman Ben S. Bernanke has reiterated the US central bank's readiness for taking additional monetary easing measures to breathe some life into the US economy in case the Eurozone debt crisis worsens. All eyes will be on the monthly US jobs data, due out on Friday. The US financial markets will be shut today for the Labor Day holiday. World markets will also keep on radar this week's ECB policy meeting, where President Mario Draghi could reveal his plans to ease the elevated borrowing costs for larger euro area members such as Spain and Italy. Select Asian markets ended with smart gains. The Hang Seng index Hong Kong was up 0.4% and the Shanghai Composite in China ended higher by 0.6%. China's manufacturing sector's contraction deepend in August, two separate reports showed, sparking speculation of another round of stimulus. The China manufacturing Purchasing Managers' Index (PMI) fell to 47.6 in August on a 100-point scale, down from July's 49.3, data compiler HSBC said on Monday. That marked the lowest reading since March 2009. The final result marked a downward revision from a provisional 47.8 reading. The European markets also were trading higher amid expectations of monetary stimulus from the central banks in the US, China and Europe. The FTSE index in UK was up 0.7%, DAX index in Germany rose 0.5% and CAC index in France was trading higher by 0.6%.