Benchmarks trade with caution in early deals

Indian equity benchmarks are trading almost flat with caution in early deals as concerns about the outbreak of a global trade war persisted. Traders remained cautious on report that the Securities and Exchange Board of India has issued a fresh show-cause notice to the National Stock Exchange and some of the key officials - including former CEOs Ravi Narain and Chitra Ramkrishna - on Wednesday, asking them to explain the allegations of preferential access to a few high-frequency traders and brokers to its trading platform. However, some solace came with Union Minister Arun Jaitley’s statement that the government’s fiscal deficit target would not be breached on account of higher MSP for 14 crops as large provisioning for food subsidy has already been made in the Budget for current fiscal. Also, Rajiv Kumar, Vice-Chairman, Niti Aayog said that food and fuel are not contributing to the overall inflationary pressures in the economy. So this constant talk about inflationary pressures because of the MSP is quite misplaced.

On the global front, Asian markets are trading mostly in red at this point of time as investors remained cautious ahead of a deadline when tariffs from the US and China are due to be implemented. The US markets remained closed in last session on account of Independence Day and unable to give any cues to the other markets.

Back home, the government approved extension of recapitalisation scheme for Regional Rural Banks (RRBs) for next three years up to 2019-20 with an aim to strengthen their lending capacity. The scheme started in 2010-11 and was extended twice in 2012-13 and 2015-16. The last extension was up to March, 2017. Meanwhile, Income Tax refunds worth over Rs 70,000 crore have been issued to the taxpayers and nearly all refund claims pending as on June-end has been processed. In scrip specific developments, Biocon gained on getting EU GMP certification for manufacturing facility in Bangalore and Yes Bank jumped on getting approval from SEBI to commence Mutual Fund business.

The BSE Sensex is currently trading at 35636.89, down by 8.51 points or 0.02% after trading in a range of 35598.06 and 35748.26. There were 15 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.08%, while Small cap index was up by 0.15%.

The top gaining sectoral indices on the BSE were Energy up by 0.93%, Bankex up by 0.44%, Oil & Gas up by 0.38%, FMCG up by 0.25% and Capital Goods was up by 0.23%, while Consumer Durables down by 1.66%, Telecom down by 1.21%, Metal down by 1.05%, TECK down by 0.95% and IT was down by 0.93% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 2.52%, Mahindra & Mahindra up by 1.46%, Reliance Industries up by 1.31%, Maruti Suzuki up by 0.62% and Indusind Bank up by 0.48%. On the flip side, Tata Motors down by 3.35%, Tata Motors - DVR down by 2.47%, Infosys down by 2.24%, Bajaj Auto down by 2.02% and Vedanta down by 1.51% were the top losers.

Meanwhile, following the government’s approval to hike Minimum Support Price (MSP) for Kharif crops for 2018-19, Union Minister Arun Jaitley has said the government’s fiscal deficit target would not be breached on account of higher MSP for 14 crops. The government hiked MSP paid to farmers for paddy by a record Rs 200 per quintal and by up to 52 percent in other Kharif or summer-sown crops.

Jaitley further said that the government will be able to absorb the additional expenditure without breaching the fiscal deficit target as large provisioning for food subsidy has already been made in the Budget for current fiscal. He highlighted that the government’s initiative in raising the MSP for 14 crops would enrich and empower the farmer. He also said that added to the social sector and infrastructure investments in the rural areas, the revised MSP will go a long way to raise the quality of life in rural India.

The Cabinet Committee on Economic Affairs (CCEA), Home Minister Rajnath Singh said it would cost an additional Rs 15,000 crore to the exchequer. Moreover, in the 2018-19 Budget, the government had provided Rs 1.7 lakh crore towards food subsidy. Besides, the government aims to reduce the fiscal deficit for the current financial year ending March 2019 to 3.3 percent of the GDP from 3.5 percent in the previous fiscal.

The CNX Nifty is currently trading at 10774.20, up by 4.30 points or 0.04% after trading in a range of 10756.35 and 10786.05. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 2.76%, Ultratech Cement up by 2.27%, Mahindra & Mahindra up by 1.62%, Reliance Industries up by 1.43% and HPCL up by 1.31%. On the flip side, Titan Co down by 3.76%, Tata Motors down by 3.45%, Infosys down by 2.39%, Bajaj Auto down by 1.95% and Tata Steel down by 1.92% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 tumbled 211.62 points or 0.98% to 21,505.42, Taiwan Weighted declined 80.20 points or 0.75% to 10,641.67, Jakarta Composite decreased 12.17 points or 0.21% to 5,721.47, Hang Seng fell 246.59 points or 0.88% to 27,995.08, KOSPI shed 17.96 points or 0.8% to 2,247.50 and Shanghai Composite was down by 24.36 points or 0.89% to 2,734.77. On the flip side Straits Times  increased 1.75 points or 0.05% to 3,246.64.