Benchmarks trade in fine fettle in early deals

Indian equity benchmarks have made a positive start and are trading in fine fettle in early deals on Tuesday, with Sensex and Nifty surpassing their crucial 32,600 and 10,200 levels respectively, ahead of Infosys’ second quarter earnings to be released later in the day. Traders took encouragement with SBI’s report that the government is likely to achieve its fiscal deficit target of 3.2 per cent this financial year as the budgeted disinvestment receipts are on track to realise Rs 72,500 crore. The report noted that the government will able to meet the disinvestment target of Rs 72,500 crore as Rs 60,000 crore has already been achieved and hence the fear of low disinvestment receipts is completely unwarranted.

Firm trade in Asian counters too aided sentiments with most of the regional peers trading in green despite a weak start on Tuesday. The US markets ended lower on Monday, as traders seem reluctant to make significant moves amid a quiet day on the U.S. economic front.

Back home, stocks related to infrastructure sector remained on buyers’ radar on report that 331 infrastructure projects, each worth Rs 150 crore or above, have seen a cost overrun of Rs 1.72 lakh crore because of various reasons including delays. Ministry of Statistics and Programme Implementation monitors infrastructure projects worth Rs 150 and above. Meanwhile, the market breadth indicating the overall health of the market was strong, with 1,352 shares gaining and 676 shares declining, while a total of 89 shares were unchanged.

The BSE Sensex is currently trading at 32617.78, up by 111.06 points or 0.34% after trading in a range of 32534.21 and 32662.96. There were 19 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.21%, while Small cap index was up by 0.66%.

The top gaining sectoral indices on the BSE were Metal up by 1.60%, Realty up by 1.43%, Basic Materials up by 1.41%, PSU up by 0.87% and Utilities was up by 0.81%, while Capital Goods down by 0.39%, Healthcare down by 0.08%, Auto down by 0.04% and Industrials was down by 0.04% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 2.71%, Tata Steel up by 2.20%, NTPC up by 1.95%, Axis Bank up by 1.24% and Hindustan Unilever up by 1.19%. On the flip side, Tata Motors - DVR down by 1.02%, Tata Motors down by 0.98%, Sun Pharma down by 0.83%, Mahindra & Mahindra down by 0.78% and Larsen & Toubro down by 0.59% were the top losers.

Meanwhile, the SBI Research in its latest report has said that for the first time in about seven years, the government may achieve the fiscal deficit target of 3.2 percent of Gross Domestic product (GDP) in the fiscal year 2017-18, as the budgeted disinvestment receipts are on track to realise Rs 72,500 crore. As per the report, currently there are predictions that government is going to have a big revenue slippage in 2017-18 which may impact the headline fiscal deficit numbers, however, such projections flunk the test of logical reasoning and are grossly misconstrued. It also noted that even if the nominal growth declines significantly in 2017-18, fiscal deficit would be impacted by at most 10 basis points in upward direction.

SBI’s economic research department estimates that there could be a shortfall of Rs 1.1 lakh crore in the revenue receipts, disinvestments receipts worth Rs 72,500 crore and expenditure cuts are likely to offset the impact. Out of the total estimated shortfall of Rs 1.1 lakh crore in the revenue receipts, around Rs 77,000 crore shortfall may be from tax revenue on account of reduction in excise duty in petroleum products, tax refunds under the Goods and Services Tax (GST) and revenue compensation to states for GST implementation. The report also highlighted that the non-tax revenue may decline by Rs 38,000 crore because of lower spectrum proceeds among others.  However, it noted that budgeted disinvestment receipts are on track to realising Rs 72,500 crore.

The report further observed that the government has accumulated a total of Rs 40,491 crore in the National Small Savings Fund during the first five months of this fiscal. It could thus receive Rs 1 lakh crore in small savings in FY18, and would be able to do a buyback of Rs 75,000 crore which was contingent upon that. This, in turn, implies that the government would be able to meet its net borrowing target of Rs 3.48 lakh crore.

The CNX Nifty is currently trading at 10218.40, up by 33.55 points or 0.33% after trading in a range of 10187.85 and 10219.10. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were ONGC up by 2.62%, Vedanta up by 2.26%, Tata Steel up by 2.16%, NTPC up by 2.01% and Ultratech Cement up by 2.00%. On the flip side, Bharti Infratel down by 1.76%, HCL Tech down by 1.26%, Tata Motors down by 1.12%, Sun Pharma down by 0.93% and Bosch down by 0.80% were the top losers.

Asian markets were trading mostly in green; Shanghai Composite rose 2.54 points or 0.08% to 3,383.24, KOSPI Index gained 2.81 points or 0.11% to 2,492.86, Taiwan Weighted added 6.23 points or 0.06% to 10,741.44, Hang Seng increased 9.55 points or 0.03% to 28,315.43, Nikkei 225 jumped 10.83 points or 0.05% to 21,707.48 and Jakarta Composite was up by 11.93 points or 0.2% to 5,961.96.

On the flip side, FTSE Bursa Malaysia KLCI was down by 1.22 points or 0.07% to 1,740.25.