Market mood continue to remain lackluster

The mood on the street continued to remain lack-luster and the major averages despite some attempt of entering into green continued to trade near the neutral line, while the global sluggishness was weighing down the local market sentiments, there was additional pressure with global rating agency, Moody's Investors Services statement that India’s budget deficit would widen in 2017-18, due to lower taxes and higher public expenditure. But it also said that steps taken by the government to broaden the tax base and improve spending efficiency would help in narrowing it going forward.  However the Moody’s sovereign ratings upgrade euphoria was still continuing and restricting any downfall. While most of the sectoral indices were trading in green led by telecom and utilities, IT and basic materials along with few others were posing resistance. The broader markets were however outperforming, showing some strength and holding their early gains till the noon trade.

In non sectoral gauges, the cement stocks witnessed some pressure on reports that the government is considering banning import of pet coke - a cheap fuel used by cement, paper, brick kiln, chemicals and textile industries-to cut industrial pollution that’s contributing to hazy skies. The possible ban will be discussed on Tuesday, when oil minister Dharmendra Pradhan deliberates the issue with secretaries of several departments. In scrip specific movement shares of IndusInd Bank and YES Bank were trading higher after Asia Index announced that both of them will make an entry in the BSE’s benchmark index Sensex from December 18.

The BSE Sensex is currently trading at 33331.63, down by 11.17 points or 0.03% after trading in a range of 33288.21 and 33449.53. There were 16 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.34%, while Small cap index was higher by 0.61%.

The top gaining sectoral indices on the BSE were Telecom up by 1.07%, Utilities up by 0.92%, Power up by 0.50%, Capital Goods up by 0.46%, Industrials up by 0.44%, while IT down by 0.36%, Basic Materials down by 0.20%, TECK down by 0.17%, Bankex down by 0.14% were the losing indices on BSE.

The top gainers on the Sensex were Coal India up by 1.56%, NTPC up by 1.16%, Hero MotoCorp up by 0.85%, Maruti Suzuki up by 0.84% and Larsen & Toubro up by 0.83%. On the flip side, ICICI Bank down by 2.05%, Cipla down by 1.69%, Infosys down by 1.00%, SBI down by 0.92% and Mahindra & Mahindra down by 0.66% were the top losers.

Meanwhile, the global rating agency, Moody's Investors Service has said that India’s budget deficit would widen in 2017-18, due to lower taxes and higher public expenditure. But it also said that steps taken by the government to broaden the tax base and improve spending efficiency would help in narrowing it going forward. Moody's V-P (Sovereign Risk Group) William Foster has said the agency believes that the government's commitment to fiscal consolidation remains and sustained growth would help it reduce debt burden. India's debt-to-GDP ratio stood at 68.6% and a government-appointed panel has recommended lowering it to 60% by 2023.

Foster said that they forecast the general government budget deficit at 6.5% of GDP this fiscal year, similar to the last two fiscal years. Lower government revenues than planned in the Budget and somewhat higher government spending could lead to a deficit somewhat wider than targeted. However, over time, measures aimed at broadening the tax base and improving the efficiency of government spending will contribute to a gradual narrowing of the deficit. Together with robust and sustained nominal GDP growth, this would be conducive to a gradual decline in the government debt burden.

Moody's V-P (Sovereign Risk Group) added that a material deterioration in fiscal metrics and the outlook for general government fiscal consolidation would put negative pressure on the rating. General budget deficit includes expenditure incurred and revenue earned by both the Centre and states. He further said that the rating could also face downward pressure if the health of the banking system deteriorated significantly or external vulnerability increased sharply.

Moody’s had recently upgraded India’s sovereign rating for the first time in over 13 years and Foster said the upgrade reflects the expectation that continued progress on economic and institutional reforms will enhance India's high growth potential and its large and stable financing base for government debt and will likely contribute to a gradual decline in the general government debt burden over the medium term.

The CNX Nifty is currently trading at 10277.45, down by 6.15 points or 0.06% after trading in a range of 10261.50 and 10309.50. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 2.29%, Yes Bank up by 1.94%, Coal India up by 1.72%, Bharti Infratel up by 1.34% and Indusind Bank up by 1.32%. On the flip side, Ambuja Cement down by 2.82%, ICICI Bank down by 2.05%, Ultratech Cement down by 1.70%, Cipla down by 1.68% and Tech Mahindra down by 1.21% were the top losers.

Shanghai Composite was up by 9.49 points or 0.28% to 3,392.40, Jakarta Composite has gained 36.43 points or 0.6% to 6,088.16 and Hang Seng was higher by 43.55 points or 0.15% to 29,242.59.

On the other hand, Nikkei 225 declined by 135.04 points or 0.6% to 22,261.76, Taiwan Weighted lost 37.09 points or 0.35% to 10,664.55, KOSPI Index decreased by 6.32 points or 0.25% to 2,527.67 and FTSE Bursa Malaysia KLCI was down by 2.88 points or 0.17% to 1,718.78.