Firm trade prevails in afternoon session

Indian equity benchmarks continued their firm trade in afternoon session on account of buying in frontline counters. Sentiments got some support with Industry body FICCI’s latest Economic Outlook Survey pegging India's gross domestic product (GDP) growth at around 7.4 percent for the fiscal year 2017-18. Besides, some encouraging earnings also supported the market. On the economic front, India’s exports grew by 19.77 per cent to $24.63 billion in April on account of robust performance by sectors like petroleum, textiles, engineering goods as well as gems and jewellery. Imports too jumped 49.07 per cent to $37.88 billion last month from $25.4 billion in April 2016. However, trade deficit during April 2017 also witnessed about three-fold increase to $13249.19 million as compared to $4844.87 million in the same month last fiscal, mainly on account of sharp jump in gold and crude oil imports during the month. In scrip specific development, TCS was up by around two percent after signing a deal for office space with Brigade Group for ‘Brigade Bhuwalka Icon’, a 3.75 lakh square feet development strategically located on Whitefield main road.

On the global front, Asian markets were trading mostly in red, as investors are growing increasingly wary of the broader market as valuations look stretched and with the latest rally taking place in thin volumes and led by just a few sectors. Back home, the BSE Sensex is currently trading at 30435.79, up by 113.67 points or 0.37% after trading in a range of 30363.37 and 30518.78. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.12%, while Small cap index was up by 0.30%.

The top gaining sectoral indices on the BSE were Telecom up by 2.07%, TECK up by 0.66%, Consumer Durables up by 0.61%, IT up by 0.56% and Basic Materials up by 0.53%, while Metal down by 0.15%, PSU down by 0.10%, Oil & Gas down by 0.10% and Capital Goods down by 0.04% were the losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.98%, Dr. Reddys Lab up by 1.90%, TCS up by 1.72%, Tata Motors up by 1.68% and Wipro up by 1.19%. On the flip side, ONGC down by 1.12%, Asian Paints down by 1.05%, Coal India down by 0.76%, GAIL India down by 0.41% and Hero MotoCorp down by 0.35% were the top losers.

Meanwhile, India Ratings and Research in its latest report has said that states' fiscal deficits rose to the highest since FY04 at 3.6 percent in FY16, but the expansion of state budgets have been mainly due to higher capital expenditure, which is a long-term credit positive for the states. It also said that in fact, the combined fiscal deficit of the states have been showing rising trend since FY12 when it stood at 1.2 percent of GSFD. However, according to the RBI’s State Finances Report 2016, the combined fiscal deficits jumped to a 12- year high of 3.6 per cent, which is the highest since FY04 when it had stood at 4.2 percent, due to Uday bonds that bailed out ailing electricity discoms.

The ratings agency noted that between FY12 and FY16, the combined fiscal deficit of the states surged by 1.7 percent of GDP. The report also pointed out that this was mainly because from a 30 bps revenue surplus in FY12, their finances saw a revenue deficit of 20 bps of GDP in FY16. It stated that this period also saw the states together adding 1 percent of GDP to the fiscal deficit by way of capex.

As per the report, during FY12-FY16, the average growth of states' aggregate capex was 23.7 percent. Between FY12 and FY16 close to 60 percent of total capex by the states was divided almost equally between transport (mostly roads and bridges), power and irrigation sectors. It also explained that while the Centre's capex remained under 2 percent of GDP since FY12, the combined capex-GDP ratio of the states has remained over 2 percent since then.

The report further said that there was deterioration in states fiscal deficit in 2016-17 to 3.4 percent, but the RBI termed overall fiscal position as sustainable in the long run, counting on the GST as a big positive for finances. Adding further, it said that despite the increase in the debt burden of the states in recent years, the overall fiscal position is found to be sustainable in the long run. However, it also warned that the increasing proclivity of the states to write off farm loans may scupper the positives.

The CNX Nifty is currently trading at 9467.40, up by 22.00 points or 0.23% after trading in a range of 9456.35 and 9492.60. There were 26 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 2.91%, ACC up by 2.79%, Ultratech Cement up by 1.94%, Dr. Reddys Lab up by 1.84% and TCS up by 1.69%. On the flip side, Zee Entertainment down by 2.28%, Indiabulls Housing down by 1.24%, Asian Paints down by 1.20%, Bank of Baroda down by 1.06% and ONGC down by 1.04% were the top losers.

The Asian markets were trading mostly in red; Jakarta Composite decreased 15.37 points or 0.27% to 5,673.50, Hang Seng declined 12.69 points or 0.05% to 25,358.90, Taiwan Weighted shed 5.33 points or 0.05% to 10,031.49 and FTSE Bursa Malaysia KLCI was down by 2.77 points or 0.16% to 1,775.88.

On the flip side, KOSPI Index increased 4.68 points or 0.2% to 2,295.33, Shanghai Composite rose 15.76 points or 0.51% to 3,105.98 and Nikkei 225 added 49.97 points or 0.25% to 19,919.82.