MARKETS GAIN 1%

Indian benchmarks elegantly convalesced majority of Tuesday's losses to snap today's session above crucial resistance levels as investors covered the hefty short positions that got built yesterday amid the global weakness due to aftershock in Japan. The sanguinity in the global markets got transmitted into the domestic frontline indices after investors in Tokyo resorted to intense bottom fishing in the fundamentally strong but highly undervalued shares. Investors piled up huge positions in rate sensitive counters like realty, banks and auto ahead of RBI's mid-quarterly policy review on March 17. However, the bounce back in crude oil prices coupled with weakness in European markets in the dying hours of trade pulled the bourses off the day's high level but they still settled with gains of a percent each. The NSE's 50-share broadly followed index Nifty, pared some of its gains in the end but managed to hold on to the crucial 5,500 support level while Bombay Stock Exchange's Sensitive Index, or Sensex closed a tad short of double century gains above the psychological 18,350 mark. The broader markets too finished with strong gains and managed to outperform their larger peers, albeit with a small margin. The BSE's midcap index went home with gains of 1.37% while the smallcap index soared 1.26% points. On the BSE sectoral front, high beta Realty counter remained the top gainer in the space as it gained 2.47% on the back of gains in Unitech and DLF which rallied 4.21% and 2.44% respectively. While the rate sensitive banking counter amassed 2.15% as hefty buying in majors like SBI and ICICI Bank was witnessed as they zoomed by 3.10% and 3.03% respectively. Shares under the ADAG pack too gained traction in the session led by Reliance Infra which jumped 5.17% followed by RCom which advanced by 2%. State-run oil marketing firms such as BPCL, HPCL and IOC gained between 1-3% after hiking aviation turbine fuel prices by 6%. There remained no laggard in the sectoral space however individual stocks like heavyweight Hindustan Unilever declined 1.15%, being the top loser on Sensex, on the report that it paid less advance tax for the fourth quarter.

On the global front, all Asian equity indices finished the day in the positive terrain led by Japanese stocks which soared more than five and a half percent following a two-day huge sell off as Bank of Japan announced that they will inject $3.5 trillion into the system which lifted market sentiment.  But the European markets shrugged the optimistic Asian cues as France's CAC, Germany's DAX and Britain's FTSE drifted in to the negative zone. On the other hand, the screen trading for US index futures also indicated that the Dow could open with a cut of less than half a percent point.

Earlier on Dalal Street, the benchmark got off to an optimistic start as the index bounced back taking cues from the rebound in other Asian markets on bargain buying and a further decline in crude oil prices. The markets continued to trade firm through the day's trade thanks to sustained buying in several front line stocks. The bourses after touching intraday highs in the second half pared some portion of their gains due to rebound in crude oil prices coupled with somber cues from the European peers. Eventually markets managed to perform largely in line with Asian peers and settle with over a percent gain. The markets registered volumes of over Rs 1.11 lakh crore while the turnover for NSE F&O segment remained on the lower side compared to Tuesday at over Rs 0.96 lakh crore. Market breadth remained positive as there were 1808 shares on the gaining side against 1063 shares on the losing side while 104 shares remained unchanged.

Finally, the BSE Sensex gained 191.05 points or 1.05% to settle at 18358.69 while the S&P CNX Nifty rose by 61.50 points or 1.13% to end at 5,511.15.

The BSE Sensex touched a high and a low of 18,444.47 and 18,263.68, respectively. The BSE Mid-cap and Small-cap indices gained 1.37% and 1.26%, respectively.

Reliance Infrastructure up 5.17%, SBI up 3.10%, ICICI Bank up 3.03%, DLF up 2.44% and TCS up 2.36% were the major gainers on the Sensex.

On the flip side, Hindustan Unilever down 1.15%, Hindalco Industries down 0.56%, Cipla down 0.52%, Hero Honda down 0.22% and HDFC down 0.08% were the major losers on the index.

Goods and services tax (GST) bill has got Cabinet's approval for introduction into parliament. The bill needs the approval of two-third of parliament and of half of India's 28 states to become law. The Union Finance Minister Pranab Mukherjee is trying to introduce the bill in the current session of parliament, but is facing resistance from several states and the Bharatiya Janata Party, which is arguing that its introduction will give veto power to the union finance minister over state taxation issues, and hence the bill may possibly fail to come into effect from April 2012.

The bill which has been cleared is the fourth draft by finance ministry. The first three drafts prepared by the Centre were rejected by the states citing autonomy issues. The draft which has been approved has proposed that the GST council for taking decisions on all important matters will be formed through a presidential order. In addition, the composition of the GST Dispute Resolution Authority, proposed to be a part of the Constitution Amendment, will be decided by Parliament. Furthermore, petroleum, natural gas, diesel and ATF have been kept out of the GST ambit in the final draft.

GST is part of the proposed tax reforms that center on evolving an efficient and harmonized consumption tax system in the country. Presently, there are parallel systems of indirect taxation at the central and state levels. Each of the systems needs to be reformed to eventually harmonize them. The GST will subsume indirect taxes such as excise duty and service tax at the central level and VAT on the states front, besides local levies. Its implementation will result in moderation of rates, simplification of laws and better compliance.

Realty up 2.47%, Bankex up 2.15%, Consumer Durables (CD) up 1.90%, PSU up 1.47% and Health Care (HC) up 1.42% were the major gainer in the BSE sectoral space. There was no loser in the BSE sectoral space.

With the Finance Bill proposing to omit the commodity from the Schedule of Additional Duties of excise (goods and Special Importance) Act, 1957 the sugar prices are once again likely to shoot up. The change, which will come into effect on enactment of the Finance Bill, will empower state governments to impose VAT on sugar at a maximum 5% rate, in addition to the existing excise duty which currently stands at Rs 38/qtl for levy sugar and Rs 71/qtl for free sale sugar, the level at which it has remained since 2006. if states choose to levy the maximum of 5% VAT on sugar in addition to the existing excise duty, the total levy (excise plus VAT) on free sale sugar (on an assumed price of Rs 3000/qtl) could be as high as Rs 221/qtl. Of this, VAT alone could total up to Rs 150/qtl.

In his Budget speech, the finance minister proposed to amend the Additional Duties of Excise (goods of special importance) Act, 1957, and decided to remove sugar and textile from its schedule. After this amendment, states are free to levy value added tax on these commodities after 54 years. Due to the amendment, the Centre has given back these powers to states, which are scouting for revenues, post implementation of the goods and service tax(GST). At present, about 16 commodities are notified as declared goods. These include coal, cotton, cotton yarn, crude oil, hides and skins, iron and steel, jute, LPG for domestic use and oil seeds

Meanwhile, the government is likely to decide on sugar export on March 17, in a meeting of the empowered group of ministers (EGoM). The Agriculture Ministry has favoured permitting export of sugar, while the Commerce Ministry has sought more information on this issue. At present, the government has kept the export of 0.5 million tonnes (MT) of sugar under the open general licence (OGL) scheme on hold due to high inflation. But earlier, it had allowed mills to meet their export obligation (ALS) of nearly one million tonnes by March, 2011.

The industry has pegged India's sugar output at 25 MT for the 2010-11 sugar year (October-September), as against demand of 22 MT, while the government's production estimate is marginally lower at 24.5 MT for the same period.

The S&P CNX Nifty touched a high and a low of 5,535.10 and 5,475.95 respectively.

The top gainers on the Nifty were Reliance Infrastructure up 4.84%, Ambuja Cement up 4.27%, SBIN up 3.45%, ICICI up 2.86% and TCS Bank up 2.86%.

The top losers on the index were Hindustan Unilever down 1.33%, Hero Honda down 0.51%, Hindalco down0.51%, HDFC down 0.47% and Cipla down 0.42%.

European markets were trading mix on Wednesday. France's CAC 40 declined 0.91%, Germany's DAX dropped 0.18% and Britain's FTSE 100 declined by 0.71%.

All the Asian equity indices finished the day's trade in the positive terrain on Wednesday led by Japanese stocks which soared more than five and a half percent following a two-day huge sell off as Bank of Japan announced that they will inject $3.5 trillion into the system which lifted market sentiment. Bargain hunting following a heavy two-day selloff also aided sentiments in the region. Moreover, Taiwan stocks closed with a gain of more than one percent in the day's trade as investors sought bargains in auto making issues, which have plunged over 11 percent in the previous two sessions.