Benchmarks continue firm trade; Nifty holds 10,400 mark

Indian equity benchmarks continued their trade in green in morning session on account of buying in frontline blue chip counters a day after BJP maintained its stronghold in Gujarat and also won elections in Himachal Pradesh. The rupee opened on a flat note against dollar. Foreign Portfolio Investors stood net sellers in secondary markets on Monday and sold shares worth Rs 842.79 crore with gross purchases and gross sales stood at Rs 9,270.16 crore and 10,112.95 crore, respectively. Sentiments were upbeat on a private report which highlighted brighter growth prospects for India by FY20 and beyond. India’s growth prospect is likely to see a slowdown in the next two years followed by recovery in the medium term, with 2019-20 GDP expected at around 7.6 per cent.  The report added that India’s growth story has a two-part narrative. The first is a slowdown and gradual recovery in the short run, likely over 2017-18 and 2018-19 as key sectors revive from disruptions related to the implementation of the goods and services tax (GST). The subsequent narrative is of brighter growth prospects in the medium term (2019-20 and beyond). Investors took note that the BJP’s victory in the Gujarat elections, hard-fought as it was, points clearly to the possible direction of the Budget that finance minister Arun Jaitley will present in February. Given its setbacks in non-urban areas, the big focus of the ruling party will be on agriculture and the rural economy, apart from a likely boost in minimum support prices (MSP).

The upsides was however capped on report that the government has planned an additional expenditure of Rs 66,113 crore with a net cash outgo of Rs 33,380 crore, which could have some adverse impact on the fiscal deficit for the current financial year. The government has presented the second supplementary demand for grants seeking nod for additional spending in the current fiscal. Separately, a report by India Ratings warned that the farm debt waivers announced by the five large states together will widen the combined fiscal deficit of the states by Rs 1,07,700 crore or 0.65% of GDP this financial year. The combined fiscal deficit of the states for FY18 has been budgeted at 2.7% of GDP or Rs 4.48 trillion. Uttar Pradesh, Punjab, Maharashtra, Rajasthan and Karnataka have announced farm loan waivers this year after a string of farmer suicides in these states.

Traders were seen piling up position in Consumer Durables, Auto and Consumer Disc stocks, while selling was witnessed in Telecom and TECK sector stocks. Select stocks related to tourism and hotel space were buzzing in today’s trade with the Union Tourism Minister K J Alphons statement that there was no adverse impact of the GST rollout on foreign tourist arrivals (FTAs) in the country. In scrip specific development, Sri Adhikari Brothers Television Network was locked at upper circuit limit after the company and communication devices company Pantel Technologies, came together to create a bouquet of 20 television channels.

On the global front, Asian markets were trading mostly in red. The World Bank raised its forecast for China’s economic growth in 2017 to 6.8 percent from 6.7 percent it projected in October, as personal consumption and foreign trade supported growth. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 33,700 and 10,400 levels respectively. The market breadth on BSE was positive in the ratio of 1702:543, while 122 scrips remained unchanged.

The BSE Sensex is currently trading at 33704.24, up by 102.56 points or 0.31% after trading in a range of 33666.62 and 33746.73. There were 23 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.86%, while Small cap index was up by 1.16%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.82%, Auto up by 1.45%, Consumer Disc up by 1.28%, Basic Materials up by 1.12% and Metal up by 1.00%, while Telecom down by 0.28% and TECK down by 0.01% were the only losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 1.75%, Tata Motors up by 1.62%, Maruti Suzuki up by 1.60%, ONGC up by 1.59% and Bajaj Auto up by 1.44%.

On the flip side, Bharti Airtel down by 1.12%, Indusind Bank down by 0.64%, Wipro down by 0.47%, Kotak Mahindra Bank down by 0.44% and Infosys down by 0.33% were the top losers.

Meanwhile, the government has sought Parliament’s approval to spend a net additional Rs 33,380 crore ($ 5.21 billion) in new spending in the fiscal year to March 2018. The additional spending will be on top of an approved spending of Rs 21.4 lakh crore in the annual budget. As per a finance ministry statement the government has sought Parliament’s nod for gross additional spending of Rs 66,113 crore in 2017-18, but given the savings by ministries and enhanced receipts aggregating to Rs 32,732.05 crore, the Centre’s net cash outgo would be only Rs 33,379.99 crore.

Finance Minister Arun Jaitley moving the second batch of Supplementary Demands for Grants for 2017-18 in Lok Sabha also sought Parliament’s approval for “token provision” of Rs 1.3 crore - Rs 1 lakh for each item of expenditure - for enabling re-appropriation of savings in cases involving ‘new service or new instrument of service’. The government has sought approval for Rs 960 crore towards establishment related expenditure, including payment of advance user charges to Goods and Services Tax Network and information technology.

The new spending proposal includes Rs 20,532 crore for the fertiliser sector to clear liabilities towards urea freight subsidy and writing off the loan and waiver of interest in respect of three fertiliser PSUs. The other major spending heads include Rs 15,908 crore towards roads and highways sector and Rs 8,394 crore for Mahatma Gandhi National Rural Employment Guarantee Scheme, while Rs 5,198 crore extra provided for immunisation programme. It also includes Rs 1,033.8 crore towards grants for creation of capital assets, subsidies and other charges for Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya). As much as Rs 5,905 crore was provided to meet Seventh Pay Commission induced salary increase. The additional spending will also include Rs 10 lakh for setting up a special purpose vehicle (SPV), as part of the Air India disinvestment plan.

The CNX Nifty is currently trading at 10419.40, up by 30.65 points or 0.30% after trading in a range of 10406.00 and 10431.50. There were 33 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were UPL up by 2.82%, Eicher Motors up by 2.28%, Hero MotoCorp up by 1.83%, Aurobindo Pharma up by 1.67% and Maruti Suzuki up by 1.66%.

On the flip side, HCL Tech down by 1.57%, Bharti Airtel down by 1.15%, Bajaj Finance down by 0.60%, Wipro down by 0.56% and Lupin down by 0.53% were the top losers.

The Asian markets were trading mostly in red; Taiwan Weighted decreased 39.94 points or 0.38% to 10,466.58, Nikkei 225 decreased 18.52 points or 0.08% to 22,883.25, FTSE Bursa Malaysia KLCI decreased 11.45 points or 0.65% to 1,740.19 and KOSPI Index decreased 6.89 points or 0.28% to 2,474.99.

On the other hand, Shanghai Composite increased 17.69 points or 0.54% to 3,285.61, Jakarta Composite increased 36.23 points or 0.59% to 6,170.19 and Hang Seng increased 246.97 points or 0.85% to 29,297.38.