Markets have opened on a strong note on the first day of July F&O series, amid short covering in index heavyweights, on hopes that European leaders finalise plans to resolve the debt crisis in the region at the two-day European Summit which ends today. Further, the clarity on General Anti-Avoidance Rule (GAAR) also boosted sentiment.
Reports suggest that European leaders have agreed to provide 120 billion euros to help some countries in the region to tide over their debt crisis.
In draft guidelines on GAAR, on which stakeholders’ comments were invited, the ministry rejected suggestions to prescribe a flat tax on all FII (foreign institutional investor) transactions but tried to soften the blow by clarifying non-resident investors among FIIs would not be taxed.
At 9:50AM, the 30-share Sensex was up 268 points at 17,258 and the 50-share Nifty advanced 76 points to 5,225 levels.
Overnight, the US markets ended lower. The Dow Jones industrial dropped 25 points, to 12,602. S&P 500 Index shed 3 points to 1,329 and Nasdaq Composite 26 points to 2,849.
Asian markets were trading on a mixed note as European leaders argued over how to ease borrowing strains in Italy and Spain and stop the euro zone debt crisis spreading, with investors fearful of US reaction to the deadlock. The Nikkei and Shanghai composite were trading lower. While, the Hang Seng advanced 370 points to 19,395 levels.
The gains were led by capital goods, power, bank and FMCG shares. The BSE Capital Goods and Power indices were both up 1.7% each in early trades while the Bankex and FMCG indices were up 1.5% each.
Capital goods shares were up on the back of value buying at lower levels after the government recently imposed import duty on power equipment. BHEL and Larsen & Toubro were up 1.5-2% each.
Tata Power was up 2% after the company late Thursday said that it has completed 51% acquisition in Tata BP Solar India while NTPC was up 2% each. NHPC was up 1% after the company late Thursday said that 2 units of 77MW each will of Charmers Hydro Electric Project will commence commercial operations from June 30.
Banking shares were up on short covering after the sell off last week following RBI's neutral stance on key policy rates. SBI, HDFC Bank and ICICI Bank were up 1.7-2% each.
FMCG majors Hindustan Unilever and ITC were both up 1.7%.
Shares of automobiles companies have gained ground after the state-run oil marketing companies cut petrol price by Rs 2.46 per litre. This is the second time that fuel retailers reduced petrol price since they raised it by Rs 7.50 a litre on May 24. The fuel price had been cut by Rs 2 a litre on June 3.
Tata Motors, Maruti Suzuki and Mahindra and Mahindra are opened higher by 2% each, while Ashok Leyland, Bajaj Auto and Hero MotoCorp are up 1-2% on the BSE.
NCC Limited has soared 7.5% to Rs 43 after the company said that Rakesh Jhunjhunwala and his family have increased their stake in the company to 7.99%. In a disclosure made to the stock exchanges, Mrs Rekha Jhunjhunwala, Mr Rakesh Jhunjhunwala, Rare Investments and others informed that they collectively acquired about 750,000 shares equivalent to 0.3% stake in the company through open market purchase on Thursday, June 28.
In the broader market, the BSE Mid-cap and Small-cap indices were both up 0.8% each. The market breadth was positive with 1,147 gainers and 372 losers on the BSE.