Weak global cues drag benchmarks lower in early deals

Indian equity benchmarks made a sluggish start and are trading in red terrain in early deals on Tuesday, with frontline gauges declining below their crucial 36,200 (Sensex) and 11,100 (Nifty) levels amid concerns over valuations after recent strong gains. Traders also remained on sidelines ahead of upcoming budget as this will be the last full year budget of the government before next year’s Lok Sabha election. Market participants shrugged off report that Securities and Exchanges Board of India (SEBI) may tighten net worth norms, bring in new shareholding rules and ease directorship conditions for stock exchanges, depositories and clearing corporations. Investors also failed to draw any sense of relief with chief economic adviser Arvind Subramanian’s statement that there is robust and broad-based revival in the Indian economy that co-exists with macroeconomic challenges.

Weakness in Asian counterparts too dampened sentiments with all the regional peers trading in red at this point of time. Japanese market edged lower by around one and a half percent on stronger yen denting investors’ sentiments. Investors also digested mixed local economic data. The US markets ended lower on Monday after the 10-year treasury yield shot higher, raising concerns higher interest rates would snuff out the bull market.

Back home, traders failed to get any solace with Economic Survey stating that measures to curb black money and encourage tax formalisation, including demonetisation and GST, have increased personal income-tax collections substantially. Meanwhile, Amber Enterprises have made a great debut on the BSE and is trading with a gain of around 33% in early deals.

The BSE Sensex is currently trading at 36112.98, down by 170.27 points or 0.47% after trading in a range of 36090.34 and 36291.82. There were 9 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.64%, while Small cap index was down by 1.09%.

The only gaining sectoral indices on the BSE were PSU up by 0.53% and Oil & Gas up by 0.32%, while Healthcare down by 0.97%, Basic Materials down by 0.91%, Capital Goods down by 0.85%, FMCG down by 0.80% and Industrials was down by 0.76% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 2.03%, Hero MotoCorp up by 0.90%, ONGC up by 0.76%, Bharti Airtel up by 0.61% and Bajaj Auto up by 0.59%. On the flip side, Asian Paints down by 2.30%, Power Grid Corporation down by 1.60%, ICICI Bank down by 1.53%, Wipro down by 1.22% and Adani Ports down by 1.21% were the top losers.

Meanwhile, as the government has done well on disinvestment and non-tax revenue collections, the NITI Aayog Vice Chairman Rajiv Kumar has said that the fiscal deficit target for 2017-18 may see only a slight slippage. He also said that the glide path to reduce fiscal deficit could change and government may settle for slightly higher fiscal deficit in 2018-19 as well. Besides, the government is aiming to restrain the fiscal deficit for 2017-18 to 3.2% of the Gross Domestic Product (GDP), and 3% in 2018-19.

Kumar said “There could be a fiscal deficit slippage in 2017-18 but not much, I can’t see it slipping very much because government has done lot on disinvestment front and on non tax revenue front”. He added that the glide path could change. Therefore, they might expect slightly higher fiscal deficit target for 2018-19 as well.

NITI Aayog Vice Chairman further said that going forward, tax revenue will be optimistic. Talking about the oil prices, he said “I am afraid, we will have to take the pain. Listing of a very large oil company may be one of the reasons of high oil prices. Also, government is working to reduce our dependence on petroleum product”.

The CNX Nifty is currently trading at 11061.90, down by 68.50 points or 0.62% after trading in a range of 11055.45 and 11121.10. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were SBI up by 1.54%, HPCL up by 1.21%, GAIL India up by 1.03%, BPCL up by 0.94% and Hero MotoCorp up by 0.89%. On the flip side, Asian Paints down by 2.09%, Eicher Motors down by 1.82%, Aurobindo Pharma down by 1.76%, Bharti Infratel down by 1.74% and ICICI Bank down by 1.64% were the top losers.

Asian markets are trading in red; Nikkei 225 declined 317.66 points or 1.34% to 23,311.68, Hang Seng decreased 273.46 points or 0.83% to 32,693.43, Taiwan Weighted dropped 102.04 points or 0.91% to 11,119.77, Jakarta Composite tumbled 77.11 points or 1.15% to 6,603.51, KOSPI Index shed 28.63 points or 1.1% to 2,569.56, Shanghai Composite fell 26 points or 0.74% to 3,497.00 and FTSE Bursa Malaysia KLCI was down by 1.21 points or 0.06% to 1,869.31.