Benchmarks trade with marginal gains ahead of RBI’s policy outcome

Indian equity benchmarks made a positive start and are trading slightly in green ahead of the Reserve Bank of India’s (RBI’s) monetary policy meeting outcome as well as an outcome from FOMC meeting which will be out later in the day. RBI’s monetary policy committee is expected to maintain its neutral policy stance given the volatility in crude oil and food prices. Traders took encouragement with the commerce and industry ministry’s data showing that growth of eight core sectors expanded to 7-month high of 6.7% in June on the back of better performance by cement, refinery and coal segments. Investors also got some support with a private report that the Indian economy is likely to have witnessed solid economic growth in the April-June quarter but leading indicators suggest a slowdown in the coming months. The report stated that GDP growth to peak in April-June quarter and then moderate to 7.2% in the second half of 2018 from around 7.8% in first half. However, gains remained capped after the Minister of State for Finance Shiv Pratap Shukla has said that gross bad loans in Indian banks surged to more than Rs 9.61 lakh crore by the end of 2017-18, while loans to industries formed a major chunk of such non-performing assets.

On the global front, Asian markets are trading mostly in green at this point of time, following gains on Wall Street, as a report of attempts to renew talks between the US and China eased trade war fears, but investors will be keeping a close eye on data due today. The US markets ended higher on Tuesday, following good earnings and economic data and a report that US-China trade talks would resume.

Back home, the United States on Monday designated India as a Strategic Trade Authorization-1 (STA-1) country - a status that will allow the country to buy highly advanced and sensitive technologies from America. Stocks related to banking sector edged higher after S&P Global Ratings said that India’s weak banking system will strengthen over couple of years as stressed loans are cleared and capital base expanded by government’s fund infusion in state-owned lenders.

The BSE Sensex is currently trading at 37647.63, up by 41.05 points or 0.11% after trading in a range of 37597.24 and 37711.87. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.38%, while Small cap index was up by 0.42%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.11%, Energy up by 0.77%, Telecom up by 0.73%, FMCG up by 0.59% and PSU was up by 0.58%, while Power down by 0.31%, Realty down by 0.09%, Industrials down by 0.06% and Consumer Durables was down by 0.04% were the few losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 1.75%, TCS up by 1.43%, Bharti Airtel up by 1.28%, Indusind Bank up by 1.26% and Kotak Mahindra Bank was up by 1.12%. On the flip side, Tata Motors - DVR down by 3.19%, Tata Motors down by 2.99%, Axis Bank down by 1.11%, NTPC down by 0.74% and HDFC down was by 0.72% were the top losers.

Meanwhile, India’s fiscal deficit at the end of first three months of current financial year (FY19) stood at 68.7% of the Budget Estimate (BE) for 2018-19. It improved compared to the year-ago period, when it was 80.8% of the target. The improvement was mainly on account of higher revenue collection. The Controller General of Accounts’ (CGA) data showed that in actual terms, the fiscal deficit or gap between the total expenditure and receipts was Rs 4.29 lakh crore. The fiscal deficit target for FY19 is Rs 6.24 lakh crore.

According to the data, the tax collection at end-June was Rs 2.37 lakh crore or 16% of the BE. The total receipts of the government were Rs 2.78 lakh crore during April-June quarter or 15.3% of the BE. In the similar period of 2017-18, the collection was 13.1% of the BE. Total expenditure during the first three months of the fiscal was Rs 7.07 lakh crore or 29% of the BE. The expenditure was marginally higher as a percentage of BE in the last fiscal. The capital expenditure was Rs 86,988 crore or 29% of the BE.

The fiscal deficit is the gap between total spending and revenue and is a measure of the government’s market borrowing. Besides, the government had budgeted to cut fiscal deficit to 3.3% of Gross Domestic Product (GDP) in the current fiscal, from 3.53% in 2017-18.

The CNX Nifty is currently trading at 11373.00, up by 16.50 points or 0.15% after trading in a range of 11358.65 and 11386.90. There were 33 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Indian Oil Corporation up by 2.40%, Lupin up by 1.83%, Bajaj Auto up by 1.76%, HPCL up by 1.74% and TCS was up by 1.58%. On the flip side, Tata Motors down by 2.73%, Eicher Motors down by 1.61%, Axis Bank down by 1.34%, Indiabulls Housing down by 1.08% and NTPC was down by 0.74% were the top losers.

Asian markets are trading mostly in green; Jakarta Composite rose 50.13 points or 0.84% to 5,986.57, Straits Times surged 3.56 points or 0.11% to 3,323.41, Taiwan Weighted advanced 24.76 points or 0.22% to 11,082.27, KOSPI gained 8.12 points or 0.35% to 2,303.38 and Nikkei 225 increased 150.18 points or 0.66% to 22,703.90.

On the flip side, Hang Seng slipped 7.54 points or 0.03% to 28,575.47 and Shanghai Composite was decreased 9.07 points or 0.32% to 2,867.33.