Benchmarks make optimistic start; Sensex reclaims 34,400 mark

Indian equity benchmarks made an optimistic start and are trading in fine fettle in early deals on Friday, with frontline gauges recapturing their crucial 34,400 (Sensex) and 10,550 (Nifty) levels amid firm global cues. Traders shrugged off disappointing trade balance data. India’s merchandise trade deficit for January widened from a year ago. The visible trade deficit increased to a 56-month high of $16.30 billion in January from $9.90 billion in the same month last year as export growth slowed down and imports of precious stones and crude oil surged. Exports grew an annual 9.07 percent while imports jumped 26.10 percent. Meanwhile, IMF said that the tax collection assumptions in India’s budget is ambitious but there is a need to look into the fiscal implications of some of the initiatives that are presently unfunded.

Global cues remained supportive with Asian stock markets trading higher at this point of time, extending gains from the previous session, after crude oil prices rallied and U.S. stocks extended their winning streak to five sessions overnight as investors largely shrugged off indications of rising inflation. However, trading in the region is subdued as many of the markets are shut for the Lunar New Year holidays. The U.S. markets edged higher to extend their recent winning streak to five sessions on Thursday.

Back home, stocks of Punjab National Bank (PNB) continued to reel under pressure on worries over the Rs 11,300 crore fraud case. Meanwhile, media reports suggest that as many as 17 banks lent about Rs 3,000 crore to various firms of Nirav Modi, the man at the center of the alleged $1.77 billion banking fraud at PNB. However, 8K Miles Software edged higher on launching Blockchain Platform and Indoco Remedies advanced on receiving EU GMP Certification for Goa Plant III.

The BSE Sensex is currently trading at 34409.05, up by 111.58 points or 0.33% after trading in a range of 34405.97 and 34508.24. There were 21 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.28%, while Small cap index was up by 0.52%.

The top gaining sectoral indices on the BSE were IT up by 1.70%, TECK up by 1.48%, Realty up by 1.13%, Telecom up by 0.69% and Basic Materials was up by 0.54%, while PSU down by 0.32% and Auto was down by 0.13% were the only losing indices on the BSE.

The top gainers on the Sensex were Infosys up by 1.78%, TCS up by 1.71%, Dr. Reddys Lab up by 1.67%, Wipro up by 1.15% and Tata Steel up by 0.74%. On the flip side, Hindustan Unilever down by 0.78%, Power Grid Corporation down by 0.73%, SBI down by 0.70%, Sun Pharma down by 0.50% and Mahindra & Mahindra down by 0.47% were the top losers.

Meanwhile, terming tax collection assumptions in India’s budget as ambitious, the International Monetary Fund (IMF) director of Communications Department Gerry Rice has said that the budget for 2018-19 assumes the tax revenue to increase faster than the value of transactions in the economy. He added that the budget aims for a deficit that is smaller than the deficit that was expected in 2017-18.

IMF director of Communications Department has pointed out that the budget also assumes the government will be able to collect higher tax revenue from the same amount of consumption and income. But, he said there is a need to look into the fiscal implications of some of the initiatives that are presently unfunded.

Citing some of the implementations relating to the goods and services tax (GST) in 2017, Rice said if these issues persist, tax revenue collection could fall short on the budget. Referring to some of the social welfare programmes announced by finance minister Arun Jaitley, he said that in the budget, there are also some initiatives that are presently unfunded and fiscal implications of these need to look at a little bit more closely as more details become available.

Gerry Rice further said that the IMF is also looking at some of the potential slippages on the revenue side or higher outlays on new policy initiatives because they could result in cost to capital expenditures, which the world body feels is important to support a medium-term growth.

The CNX Nifty is currently trading at 10583.90, up by 38.40 points or 0.36% after trading in a range of 10579.70 and 10612.90. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were HCL Tech. up by 3.03%, Ambuja Cement up by 2.27%, Infosys up by 1.78%, TCS up by 1.72% and Dr. Reddys Lab up by 1.70%. On the flip side, BPCL down by 0.81%, Hindustan Unilever down by 0.66%, SBI down by 0.61%, Adani Ports down by 0.56% and Power Grid Corporation down by 0.53% were the top losers.

Most of the Asian equity markets remained closed for trade on the occasion of Lunar New Year. Nikkei 225 surged 354.98 points or 1.65% to 21,819.96.