Top three reasons why Sensex gained over 500 points in trade today

NEW DELHI: Braving against all odds, domestic markets today broke free from the bear grip after a long lull. The S&P BSE Sensex rose 517.78 points, or 1.88 per cent, to settle the session at 28,067.31.

The broader 50-share Nifty barometer added 162.70 points, or 1.95 per cent, to close the day at 8,518.55.

The market sentiment was boosted on hopes that GST could well see light of the day as the government sticks to its timeline of April 2016. Market also cheered the MSCI rejig, which could bring inflows to the tune of $254 million to the Indian market.
We have listed out three factors which might be pushing the Sensex higher:

MSCI rejig:

India is expected to receive $254 million worth of inflows on MSCI rejig, said foreign brokerage HSBC Securities in a research note. MSCI said that all changes will be reflected from August 31.

Brokerage CLSA expects passive inflows of $180-$200 million for Indiabulls Housing between August 13 and Aug 31. It expects the NBFC to see buying of around 14-17 million shares during the period mentioned.

The brokerage expects passive inflows of $130-$140 million for Glenmark between August 13 and August 31.

Hopes of GST implementation:

The government is determined to implement the proposed goods and services tax (GST) from next April as the latest session of parliament ended without approving the reform measure.

The Monsoon Session of parliament ended before lunch on Thursday without the passage of the GST Constitutional Amendment Bill.

"From the market's point of view, any legislation which is key for the economy get pushed out, there are worries and more so for the longer-term investors, more so for institutional investors," says Ratnesh Kumar, a market expert, in an interview with ET Now.

"Yes, it has been a worry for the market, but the hope is that politics is on one side and eventually the GST will get done. We have heard talks about special session being called, so I do not think market is as yet that pessimistic that April 16 implementation will not happen. There is still a hope for that."

Short coverings led the rally:

What could be fuelling rally in markets is short coverings which usually happens post the event. "This sort of short covering often happens pre some sort of news, so definite short coverings," says Ashwani Gujral, Fund Manager, Ashwanigujral.com.

"Nifty managed to sustain levels of 8300-8320, so chances are that with this kind of move, we could get back towards the retest of 8600-8650. Definitely, a lot of the downside pressure has been taken off," he added.

Gujral added that he has just taken long positions on several stocks and the Bank Nifty, because chances are that more upside could come in as the market moves up.