Local equities erase gains to trade marginally in red

Local equity benchmarks erased all of their initial gains in morning session, to trade negatively just below the neutral lines. Metal, PSU, and Oil & Gas counters witnessed notable losses, while Healthcare and information technology sectors edged higher. Traders took note of NITI Aayog Vice-Chairman Rajiv Kumar’s statement that he was more concerned about the rising trade deficit than the falling rupee, and called for efforts to push exports. However, losses remained capped as traders are getting some solace with report that the income tax growth which was mere from 8.2% in FY16 rose to 26.8% in FY17 and 21.0% in FY18. Moreover, tax collection in the financial year 2017-18 stood at the record Rs 10.03 lakh crore. And between April 1 and July 31, there has been a rise of 53% in the number of income-tax returns filed electronically, for which GST could be given credit. Besides, a report also stated that Petrol and diesel will not come under the purview of Goods and Services Tax (GST) in the immediate future as neither the Central government nor any of the states is in favour on fears of heavy revenue loss.

On the global front, Asian markets were trading mixed, as traders were taking note a report that US and Chinese officials met for the first time in more than two months to try find a way out of their deepening trade conflict, but there was no evidence that the low-key discussions would halt a new round of US tariffs. Back home, on the sectoral front, metal stocks slipped as US announced hefty preliminary anti-dumping duties on metal pipes imported from India, China and four other countries, in an aggressive tactic by the Trump administration to protect the American industry and lower the trade deficit.

The BSE Sensex is currently trading at 38271.55, down by 14.20 points or 0.04% after trading in a range of 38248.62 and 38487.63. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.05%, while Small cap index was down by 0.19%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.76%, IT up by 0.65%, TECK up by 0.50%, FMCG up by 0.37% and Power up by 0.28%, while Metal down by 1.45%, PSU down by 0.85%, Basic Materials down by 0.80%, Oil & Gas down by 0.64% and Bankex was down by 0.58% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 1.42%, Mahindra & Mahindra up by 1.04%, Hindustan Unilever up by 0.96%, Bharti Airtel up by 0.88% and HDFC was up by 0.79%. On the flip side, Tata Motors down by 2.94%, Vedanta down by 2.76%, Tata Motors - DVR down by 2.49%, SBI down by 1.68% and Kotak Mahindra Bank was down by 1.57% were the top losers.

Meanwhile, amid fiscal deficit for April-June of 2018 coming at $62.57 billion or 68.7 percent of the budgeted target for the current fiscal year, the finance ministry has said that the government will meet the fiscal deficit target for the current fiscal although there could be some slippages in the current account deficit (CAD) on account of high crude oil prices. The comfortable forex reserves built over the last three years will help the government deal with the volatility in oil prices in the international market. However, price fluctuation has come down significantly to a manageable level.

As per estimates, India’s CAD may widen to 2.5 percent of the gross domestic product due to higher oil prices -which has been accentuated by rupee depreciation. CAD, the difference between the inflow and outflow of foreign exchange, jumped to $48.7 billion, or 1.9 percent of GDP inFY18. This was higher than $14.4 billion, or 0.6 percent, in FY17. With regard to fiscal deficit, the government is committed to meeting the target of 3.3 percent in current financial year. In the Union Budget 2018-19, the government had revised the fiscal deficit target for 2017-18 to 3.5 percent from the earlier estimate of 3.2 percent. In absolute terms, the fiscal deficit had reached Rs 5.91 lakh crore, or 99.5 percent of the budget estimates.

On the revenue front, income tax collection has been robust, with E-way and Goods and Services Tax (GST) collection stabilising. Revenue collection under GST is well on track and could exceed the target. Also, the rate cut introduced recently will have minor impact on the revenue collection but that would be compensated by increased compliance and e-way bill. On disinvestment, the government will meet the disinvestment target of Rs 80,000 crore projected for the current fiscal. As far as inter-creditor agreement is concerned, it said that as many as 31 banks and financial institutions have signed this.

The CNX Nifty is currently trading at 11557.30, down by 13.60 points or 0.12% after trading in a range of 11550.10 and 11620.70. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Lupin up by 2.07%, Cipla up by 1.93%, Dr. Reddy’s Lab up by 1.57%, Power Grid up by 1.49% and HCL Tech was up by 1.18%. On the flip side, Tata Motors down by 3.09%, Indian Oil Corporation down by 3.01%, BPCL down by 2.79%, HPCL down by 2.77% and Vedanta was down by 2.70% were the top losers.

Asian markets were trading mixed, Hang Seng slipped 244.86 points or 0.88% to 27,682.72, Shanghai Composite dropped 9.21 points or 0.34% to 2,705.40, Jakarta Composite declined 0.93 points or 0.02% to 5,943.37 and KOSPI was down by 2.77 points or 0.12% to 2,270.56.

On the other side, Straits Times surged 46.60 points or 1.44% to 3,246.49, Taiwan Weighted gained 30.06 points or 0.28% to 10,834.26 and Nikkei 225 was up by 24.60 points or 0.11% to 22,387.15.