Stock markets are likely to react positively tomorrow as an expert committee on General Anti Avoidance Rules (GAAR) has recommended postponement of the controversial tax provision by three years.

However, rest of the week could be volatile as global market reactions to US Federal Reserve Chairman Ben Bernanke’s Jackson Hole speech is likely to keep traders busy along with a host of local cues, they added.

Bernanke had in an August 31 speech to central bankers and economists at an annual forum in Jackson Hole focussed on the economic challenges that the US faces while hinting that the Fed will provide more policy stimulus, if needed, to aid recovery.

Back home, automobile and cement stocks will be focus this week as companies from these sectors declare monthly sales data for August.

“Stock market would react positively to the GAAR move in near term,” CNI Research CMD Kishor Ostwal said.

As a step towards reassuring global investors, the GAAR committee in its draft report, has also suggested that GAAR provisions should not be invoked to examine the genuineness of the residency of entities in Mauritius.

Analysts, however, said domestic investors may continue to be concerned over the logjam in Parliament, which raised the prospect of washout of the remaining part of Monsoon Session which ends on September 7, dashing hopes for much-awaited economic reforms.

“Parliament’s Monsoon Session stayed immobilised due to objection and uproar from BJP over coal block allocations.

This has once again raised doubts over the timely implementation of reforms,” Rakesh Goyal, Vice-President, Bonanza Portfolio, said.

The 5.5 per cent GDP growth data for April-June quarter could imply weak hopes over an interest rate cut in near future and this may lead to further selling pressure in rate-sensitive sectors, he said.

Besides, rising crude oil price is not a good signal in an already slowing economy and would lead to rising costs, Goel added. Brent crude is trading over $100 a barrel.

According to Ostwal: “The next driver for the market is RBI policy on September 17.”

On the global front, the ECB meet on September 6, remains an important event as it would give details on its plan to relaunch government bond-buying programme to help fight the region’s economic crisis, an expert said.

Brokers said robust foreign fund inflows are a big positive for the equity market.

In August, Foreign Institutional Investors (FIIs) were gross buyers of shares worth Rs 48,136 crore, while they sold equities amounting to Rs 37,332 crore, translating into a net inflow of Rs 10,803 crore, according to a SEBI data.

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