Benchmarks recoup some losses; mood remains downbeat

Benchmarks recouped some of their losses as some amount of recovery crept into local equity markets after Union Bank reported good set of Q1 numbers, while good set of macro-economic also supported the sentiment. On the macro-front, business activity in Indian manufacturing sector, improving for the ninth consecutive month, expanded at its quickest pace in 17 months, i.e. since February 2013, for the month of July on account of flood of new orders from both domestic and external sources, while core sector output in the month of June surged to nine-month high at 7.3% mainly driven by healthy production growth in coal, crude oil, cement and electricity. Meanwhile, on the earnings front, Union Bank of India provider of banking products and services reported 19% rise in Q1 net profit of Rs 664.11 crore, compared with Rs.560.22 crore in the corresponding quarter of the preceding year. Thus, at day’s high, both Sensex and Nifty were trading above the crucial 25,800 and 7,700 levels respectively, with losses of around quarter of a percent.

Nevertheless, the overall sentiment continued to remain downbeat after India’s fiscal deficit crossed half the budget estimate (BE) for 2014-15 in the first three months of the financial year, with Finance Minister Arun Jaitley terming India’s fiscal deficit target as “ daunting”. Additionally, negative global set-up also added to pessimistic milieu. Globally, Asian shares stumbled on Friday after a month-end swoon on Wall Street even as Activity in China's factory sector quickened to a 27-month high in July, a government survey showed on Friday, adding to signs that the economy is regaining momentum after a bust of government stimulus measures. Meanwhile, doubts about the health of Europe’s economy dominated trade on its major stock markets on Thursday after a cautious message from the US Federal Reserve did little to stem the dollar’s charge to 10-month highs.

Closer home, stocks from Realty, Infra and Auto counters were the top gainers of the session, while stocks from Capital Goods, Power and Oil & Gas counters were weak links of trade. However, telecom stocks were buzzing loud after Telecom Regulatory Authority of India (Trai) chairman Rahul Khullar said he sees mobile call rates rising by 8-9% over the year as phone companies weed out freebies. The overall market breadth on BSE is in the favour of advances which thumped declines in the ratio of 991:873; while 41 shares remained unchanged.

The BSE Sensex is currently trading at 25824.91, down by 70.06 points or 0.27% after trading in a range of 25679.46 and 25862.68. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.28%, while Small cap index up by 0.27%.

The gaining sectoral indices on the BSE were Realty up by 0.88%, INFRA up by 0.85%, Auto up by 0.38%, Bankex up by 0.32% and Metal up by 0.30% while, Capital Goods down by 0.86%, Power down by 0.60%, Oil & Gas down by 0.59%, IT down by 0.56% and Consumer Durables down by 0.15% were the losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 3.58%, Bharti Airtel up by 3.26%, Hindustan Unilever up by 2.04%, Tata Steel up by 1.76% and Tata Motors up by 1.21%. On the flip side, NTPC down by 1.86%, Sun Pharma Inds. down by 1.81%, GAIL India down by 1.68%, Mahindra & Mahindra down by 1.57% and HDFC down by 1.41% were the top losers.

Meanwhile, in a cause of concern for the Finance Ministry, India’s fiscal deficit crossed half the budget estimate (BE) for 2014-15 in the first three months of the financial year. Fiscal deficit at the end Q1 FY15 was pegged at 56.1% of the budget estimate of Rs 5.31 lakh crore for the full fiscal year as growth in revenue receipts slowed and interest payments rose.

Total expenditure of the government during April-June was Rs 4.13 lakh crore or 23 percent of the entire year estimates. Of the total expenditure, plan spending was Rs 1,11,806 crore and non plan spending was Rs 3,01,797 crore. Conversely, revenue collection during the reported period was Rs 1,14,427 crore or 9.6 percent of the estimate, lowered than 11.1 percent of the estimates during  2013-14. Furthermore, total receipts (revenue and non-debt capital) of the government during the three months was Rs 115,744 crore. Revenue deficit in the three months was recorded at Rs 2,49,358 crore which was 65.9 percent of the estimates.

The government during budget 2014-15 has set fiscal deficit target at 4.1 percent of GDP this year and decided to lower it to 3 percent of GDP by 2016-17. In FY14, India’s fiscal deficit narrowed to Rs 5,08,149 crore or 4.5 percent of GDP as compared to 4.89% of GDP in the FY13. High fiscal deficit has adverse impact on country’s economy as it leads to three macro economic problems such as a balance of payments crisis, high interest rates because of crowding out and high inflation owing to the currency depreciation.

The CNX Nifty is currently trading at 7706.90, down by 14.40 points or 0.19% after trading in a range of 7649.75 and 7716.70. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Maruti Suzuki up by 3.68%, Bharti Airtel up by 3.24%, Bank Of Baroda up by 2.37%, Ultratech Cement up by 2.19% and DLF up by 2.12%. On the flip side, Tech Mahindra down by 2.35%, NTPC down by 1.93%, Sun Pharma Inds down by 1.84%, GAIL India down by 1.74% and HCL Tech. down by 1.58% were the top losers.

Asian markets were trading lower; Hang Seng declined by 164.31 points or 0.66% to 24,592.54; Nikkei 225 slid by 97.66 points or 0.63% to 15,523.11; Taiwan Weighted shed 49.34 points or 0.53% to 9,266.51; Straits Times surrendered 27.85 points or 0.83% to 3,346.21; Shanghai Composite lost 10.85 points or 0.49% to 2,190.72; Jakarta Composite down by 9.84 points or 0.19% to 5,088.80; FTSE Bursa Malaysia KLCI down by 7.75 points or 0.41% to 1,863.61 and KOSPI Index inched lower by 3.02 points or 0.15% to 2,073.10.

European markets got off to a negative start; with Germany’s DAX losing by 24.58 points or 0.26% to 9,382.90; UK’s FTSE 100 sliding 11.76 points or 0.17% to 6,718.35 and France’s CAC surrendering 8.08 points or 0.19% to 4,238.06.