Bourses continue to trade with traction; Sensex above 33,700 mark

Key Indian benchmarks continued to trade with traction in late morning session, with Sensex trading above psychological level of 33,700 mark. Traders took some encouragement with Union Finance Ministry’s latest report stating that overall fundamentals of the economy remained strong for the Year 2017-18. The report also noted that manufacturing, electricity, gas, water supply & other utility services and trade, hotels, transport & communication and services related to broadcasting sectors registered growth of over 6.0 percent in Q2 of 2017-18 over Q2 of 2016-17. The markets also remained firm as the private report highlighted brighter growth prospects for India by FY20 and beyond. However, it said that 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. Meanwhile, the global credit rating agency, Moody’s Investors Service and its Indian arm ICRA in a joint report have kept a stable outlook for the Indian power sector over the next 12-18 months, reflecting their expectation of stable industry conditions and government policy initiatives.

On the global front, Asian markets were trading mixed, after US stocks closed at fresh record highs overnight amid optimism about the outlook for Republican tax reform, which would cut corporate and individual tax rates. The House is scheduled to vote on the bill on Tuesday, with a vote in the Senate expected to follow shortly on the heels. Back home, in scrip specific development, Steel Strips Wheels (SSWL) gained after the company bagged repeat exports order from Europe for Truck wheels.

The BSE Sensex is currently trading at 33717.47, up by 115.79 points or 0.34% after trading in a range of 33666.62 and 33746.73. There were 20 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.95%, while Small cap index was up by 1.15%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.92%, Auto up by 1.69%, Consumer Disc up by 1.37%, Basic Materials up by 1.01% and Industrials up by 0.98%, while IT down by 0.07% was the lone losing index on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 3.07%, Tata Motors up by 1.79%, Bajaj Auto up by 1.75%, Maruti Suzuki up by 1.72% and ICICI Bank up by 1.72%. On the flip side, Wipro down by 0.80%, Kotak Mahindra Bank down by 0.72%, Indusind Bank down by 0.58%, Infosys down by 0.49% and HDFC down by 0.37% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has warned that the farm loan waiver scheme announced by five states - Uttar Pradesh, Punjab, Maharashtra, Rajasthan and Karnataka, will widen the combined states fiscal deficit by Rs 1.07 lakh crore  or 0.65 percent of Gross domestic product (GDP) in the financial year 2018. It also revealed that the combined fiscal deficit of these States for the year ending March 31 has been budgeted at 2.7 percent of GDP or Rs 4.48 lakh crore. Besides, it noted that nine States have budgeted a rise in their fiscal deficits/gross state domestic product (GSDP) ratios this year compared to 19 states in FY17.

As per the report, the combined fiscal deficit of the States in FY18 at 3 percent of GDP or Rs 4.99 lakh crore and this is higher than the budgeted figure but considerably lower than FY17. India Ratings’ report is based on the analysis of 29 State budgets, the impact of the farm debt waivers announced outside the budgets and implementation of the goods and services tax (GST) from July 2017. Further, it stated that out of the five states, the farm debt waivers of UP and Punjab are part of their respective FY18 budgets, while that announced by Maharashtra, Rajasthan and Karnataka are outside their annual budgets. It added that these States will have to either generate additional resources to fund farm debt waivers or cut their budgeted expenditure.

The rating agency further said that if such announcements are funded through expenditure compression, the axe usually falls first on the budgeted capital expenditure, followed by social expenditure. It also said that both cuts do not augur well from the point of view of the medium to long-term growth prospects of these States. It highlighted that Andhra Pradesh and Telangana, which announced a farm debt waivers of Rs 43,000 crore and Rs 17,000 crore, respectively, in 2014, however have adopted a staggered payment mechanism. Though, it also observed that despite fiscal pressures, the encouraging feature of FY18 state budgets is near stability in the combined revenue deficit and some improvements in the combined primary deficit of the states compared to FY17.

The CNX Nifty is currently trading at 10421.85, up by 33.10 points or 0.32% after trading in a range of 10406.00 and 10431.50. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Hero MotoCorp up by 2.98%, UPL up by 2.74%, Eicher Motors up by 2.28%, Bajaj Auto up by 1.95% and Tata Motors up by 1.80%. On the flip side, HCL Tech. down by 1.75%, Wipro down by 1.10%, Infosys down by 0.82%, Lupin down by 0.69% and Kotak Mahindra Bank down by 0.58% were the top losers.

Asian markets were trading mixed; Shanghai Composite increased 21.74 points or 0.67% to 3,289.67, Jakarta Composite increased 32.75 points or 0.53% to 6,166.72 and Hang Seng increased 268.09 points or 0.92% to 29,318.50.

On the flip side, Taiwan Weighted decreased 39.18 points or 0.37% to 10,467.34, Nikkei 225 decreased 24.58 points or 0.11% to 22,877.19, FTSE Bursa Malaysia KLCI decreased 11.45 points or 0.65% to 1,740.19 and KOSPI Index decreased 4.15 points or 0.17% to 2,477.73.