However, marketmen said there were reports today that the government will tax only those investments made by P-notes and FIIs that intended to avoid tax under the proposed General Anti-Avoidance Rules (GAAR), effective from April 1. The BSE 30-share Sensex bounced back from the day`s low of 17,061.16 to 17,257.36, up 204.58 points or 1.20 per cent.
The NSE 50-share Nifty also rebounded 58.90 points or 1.14 per cent to 5,243.15. Shares of consumer durables, FMCG, realty, teck, metal and IT shot up on good buying support. Besides, analysts said investors covered positions ahead of the expiry of March derivative contracts on Thursday providing support to the market. "Lack of any formal clarification by the Government left both traders and investors confused on the implications of GAAR on FII Investments," said Rikesh Parikh, VP Equities at Motilal Oswal Securities.
"However, there was some short-covering in the market on some hope of a statement by the Government overnight on GAAR," he added. "As expected, heavy volatility was witnessed in the market ahead of the derivative series expiry on Thursday. Market gave a smart bounce back from yesterday?s closings as positive global cues helped in strengthening the sentiments," said Shanu Goel, Research Analyst at Bonanza Portfolio. Asian shares ended higher following gains in the US markets as US Federal Reserve said easy monetary policy would continue for some time. Key indices in Singapore, Hong Kong, Japan, South Korea and Taiwan gained by up to 2.36 per cent.
However, China`s Shanghi Composite eased by 0.15 per cent. European stocks were also trading higher in the early trade and key indices in France, Germany and Britain moved up by up to 0.57 per cent. Of the 30 Sensex scrips, 24 stocks closed with gains. Major gainers were DLF (4.31 pc), Cipla (3.79 pc), Sterlite (3.56 pc), HUL (3.42 pc), Bharti Airtel (3 pc), HDFC (2.50 pc), L&T (1.87 pc), Tata Motors (1.68 pc), ITC (1.58 pc), Infosys (1.55 pc), HDFC Bank (1.47 pc), ONGC (1.38 pc), Tata Steel (1.37 pc), and Wipro (1.30 pc). Maruti Suzuki fell by 1.79 pc, and BHEL 1.05 pc.
Among sectoral indices, the BSE-Consumer Durables shot up by 2.07 pc, followed by FMCG - 1.69 per cent, Realty - 1.56 pc, Teck - 1.23 pc, Metal - 1.22 pc and IT - 1.01 pc. Although the Sensex ended with smart gains, the total market breadth remained negative as 1,707 stocks closed with losses, while 1,189 stocks ended with gains. The total turnover dipped to Rs 2,906.29 crore from Rs 3,801.28 crore on Monday.