Benchmarks trade marginally in green in early deals

Indian equity benchmarks have made an optimistic start on Wednesday, as investors await the outcome of two-day Fed policy review later in the day. However, gains remained capped with SBI Research stating that economy has been on a downslide since September 2016 and the slowdown is real and not technical, calling for more public spending to arrest the slide. The report advocated upping of spends by the government as a solution to the problem at hand. Meanwhile, exporters fearing that a staggering Rs 65,000 crore could get stuck in GST refunds have asked the government to fast-track the refund process and avoid further deterioration in their liquidity situation.

On the global front, Asian markets were trading mostly in green at this point of time, but some of the indices were trading in red, as investors girded for another round of geopolitical tensions after U.S. President Donald Trump threatened to annihilate North Korea. The US markets continued their record breaking spree and all three of the major averages ended the session at record closing highs.

Back home, telecom stocks reeling under pressure, as  telecom regulator, the Telecom Regulatory Authority of India (Trai), more than halved the interconnect usage charge (IUC) from October 1 and said the fee will be scrapped from 2020, in a move that it said would benefit consumers. IUC has been reduced to 6 paise a minute from 14 paise a minute and to zero starting January 1, 2020. Meanwhile, SBI Life Insurance (SBI Life) Rs 8,400 crore initial public offering (IPO) is all set to hit the market today.

The BSE Sensex is currently trading at 32452.52, up by 50.15 points or 0.15% after trading in a range of 32436.99 and 32499.88. There were 10 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.16%, while Small cap index was up by 0.43%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.29%, Energy up by 0.81%, Industrials up by 0.62%, Realty up by 0.47% and Utilities up by 0.34%, while Telecom down by 1.67%, TECK down by 0.52%, Auto down by 0.30%, IT down by 0.25% and PSU down by 0.22% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 2.24%, Larsen & Toubro up by 1.71%, Tata Steel up by 1.36%, Adani Ports up by 0.71% and ITC up by 0.71%. On the flip side, Bharti Airtel down by 2.04%, Cipla down by 1.40%, Tata Motors down by 1.37%, Hero MotoCorp down by 1.14% and Coal India down by 1.08% were the top losers.

Meanwhile, calling for more public spending to arrest the economic slowdown, SBI Research in its latest report has said that India is currently undergoing a slowdown in the Gross Domestic Product (GDP) growth rate and the continued fall since the second quarter of FY17 is not short-term in nature or even transient. Noting that the economy has undergone too many structural breaks since November 2016, it said that the slowdown is real and not technical. It also warned against any spending cuts in current situation by the government to meet fiscal deficit target as growth, which is already weak will suffer.

The report further said that government should consciously expand spending and fiscal deficit, without disturbing the borrowing maths. Though, the report also admitted that after the 2008 global credit crisis, there was a surge in spending, but was unequivocal in not paying much heed to the rating agencies. It added that let’s not chase the rating upgrade mirage. India has had a solitary net rating upgrade in the last 25 years and the economy is in urgent need of a fiscal push now to shore up growth.

SBI Research said that the government can use a clause in the Fiscal Responsibility and Budget Management Act that provides for a 0.5% slip in fiscal deficit targets. Elaborating on how to keep the net borrowings in check, like the way the government has done in the current fiscal at Rs 3.4 trillion, it recommended the government to do more buybacks and switches in G-secs. It also called for exploring the short-term borrowing route more, saying ‘short-term borrowings could be increased from the current levels, as movements in short-term rates depend crucially on liquidity'.

The CNX Nifty is currently trading at 10154.75, up by 7.20 points or 0.07% after trading in a range of 10151.10 and 10171.05. There were 18 stocks advancing against 32 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were Reliance Industries up by 2.33%, Larsen & Toubro up by 1.79%, Tata Steel up by 1.34%, GAIL India up by 0.94% and Indiabulls Housing up by 0.92%. On the flip side, BPCL down by 2.28%, Bharti Airtel down by 2.06%, Tata Motors down by 1.44%, Cipla down by 1.40% and Coal India down by 1.24% were the top losers.

Asian markets were trading mostly in green; KOSPI Index rose 0.84 points or 0.03% to 2,416.89, Shanghai Composite increased 7.49 points or 0.22% to 3,364.34, Nikkei 225 gained 11.3 points or 0.06% to 20,310.68 and Hang Seng was up by 63.05 points or 0.22% to 28,114.46.

On the flip side, Taiwan Weighted decreased 70.76 points or 0.67% to 10,505.38, FTSE Bursa Malaysia KLCI shed 3.09 points or 0.17% to 1,773.57 and Jakarta Composite was down by 2.56 points or 0.04% to 5,898.77.