BSE Sensex ends flat in trade, reforms key

SENSEX-CLOSE-FLAT:BSE Sensex ends flat in trade reforms key

The BSE Sensex rose slightly on Thursday ahead of the EU summit later in the day, although hopes for policy reforms after Prime Minister Manmohan Singh temporarily assumed control of the finance ministry supported sentiment.

Reuters reported Singh will seek within two to three weeks to clear up confusion over tax policy that has rattled investor confidence, a government official said on Thursday, including an "explanatory note" on portfolio investments.

Finance Secretary R.S. Gujral later told reporters the government will issue later on Thursday draft rules for the General Anti-Avoidance Rule (GAA) aimed at fighting tax evasion.

The expiry of derivatives kept trading volatile, especially towards the end of the session, as investors rolled over positions in future and options from the June series to July's.

 

"Likelihood of an upsurge is much higher than a downward move right now, as there is a lot of hope on reforms," said Sandip Sabharwal, CEO - PMS, Prabhudas Lilladher.

"Its a matter of time that some action like, FDI, fast tracking infrastruture projects, sovereign bond issue, etc, might be taken. Even the valuations are attractive for Indian equities at this point," he said .

The BSE index rose 0.14 percent to 16,990.76 points, marking a third consecutive day of mild gains.

The broader 50-share Nifty added 0.14 percent to 5,149.15 points.

Investors are awaiting potential policy measures from the government at a time when slumping economic growth and the threat of sovereign downgrades from credit agencies Standard & Poor's and Fitch Ratings have hurt confidence in India.

Investors are likely to remain cautious ahead of the European Union's two-day leaders' summit, which begins later in the day, though few investors expect any meaningful action.

Among gainers, cement shares benefitted from shortcovering ahead of the expiry of derivatives, despite a recent ruling imposing record fines on price fixing charges from the Competition Commission of India.

ACC shares rose 1.6 percent, while Ambuja Cement gained 2 percent, and Jaiprakash Associate added 3 percent.

Shares in Rolta India , and JSW Steel rose after companies' said that they have redeemed foreign currency convertible bonds worth $134.7 million and $274.4 million respectively.

However, shares of tyre manufacturers fell after a member of CCI told news channel CNBC TV18 that a probe on tyre companies was under way and an order was likely in the next 10 days.

Shares in Apollo Tyres fell 2.14 percent, while CEAT declined 2.52 percent.

Axis Bank fell 2.2 percent, while Yes Bank fell 1 percent after HSBC exited its investments in both Indian lenders, raising about a combined $430 million.

State-run bank shares were under stress a day after the RBI said India banks' growth in deposits and loans was sluggish in the month to June 15.

State Bank of India shares fell 0.7 percent, Canara Bank lost 1.16 percent.