Local equities continue lackluster trade

Local equity benchmarks continued their lackluster trade in morning session, as traders remained on sidelines ahead of August month derivatives expiry. Yes Bank, Reliance Industries and Axis Bank were the prime losers among heavy-weights, while Tata Steel, ITC and Bharti Airtel were on the gaining side. Sentiments remained subdued as rupee crashed to a new record low of 70.82 against the dollar and crude oil extends gains due to fall in US crude inventories and expected supply disruptions from Iran and Venezuela. Adding to the some pessimism foreign investors pulled out $280 million from the Indian markets so far this year, while domestic institutional investors (DIIs) continue to invest more aggressively and have put in a staggering $10 billion. Traders took note with Reserve Bank of India’s (RBI) report that the current account deficit (CAD) is expected to be largely financed by FDI flows. The report mentioned that even though exports have gathered momentum in Q1 of 2018-19, the global trade environment can reduce external demand due to protectionist policies being adopted by various countries and domestic products being increasingly replaced by imports. Meanwhile, Union minister for road transport and highways, Nitin Gadkari said that India needs foreign investment, especially in infrastructural development, to arrest free fall of Indian rupee that has hurt the economy.

On the global front, Asian markets were trading mostly in red, with Chinese markets fixed firmly on risks from the Sino-US trade war and taking little comfort from an apparent easing in business tensions in North America and Europe. Back home, State Bank of India (SBI) reported that the government will witness a windfall of at least Rs 30,000 crore from the increase in number of taxpayers. The number of returns filed, as on July 31, stands at 3.43 crore as against 2.24 crore filed during the corresponding period in FY18. In scrip specific development, Aditya Birla Capital gained on entering into joint venture with US-based alternative assets manager Varde Partners to invest in distressed assets in India.

The BSE Sensex is currently trading at 38679.85, down by 43.08 points or 0.11% after trading in a range of 38624.23 and 38819.06. There were 14 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.26%, while Small cap index was up by 0.26%.

The top gaining sectoral indices on the BSE were Metal up by 1.10%, FMCG up by 0.76%, Telecom up by 0.74%, Basic Materials up by 0.62% and Utilities was up by 0.48%, while Energy down by 0.94%, Bankex down by 0.66%, Oil & Gas down by 0.50%, IT down by 0.15% and TECK down by 0.10% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.57%, ITC up by 1.46%, Bharti Airtel up by 1.27%, Vedanta up by 1.25% and Power Grid was up by 0.96%. On the flip side, Yes Bank down by 1.67%, Reliance Industries down by 1.38%, Axis Bank down by 1.26%, Adani Ports & SEZ down by 0.99% and Indusind Bank was down by 0.90% were the top losers.

Meanwhile, amid rising oil prices and interest rates, cuts in the goods and services tax on some items and relatively high increases in minimum support prices for some crops, credit rating agency Moody's Investors Service has said that India’s Fiscal deficit is likely to be wider than budgeted in the current financial year (FY19). The government had set the target for fiscal deficit at 3.3 per cent for the current fiscal. Fiscal deficit during the first quarter of current fiscal had touched 68.7 per cent of Budget estimates. Rating agency underlined that there are risks of India breaching the 3.3 per cent fiscal deficit target for the current financial year as higher oil prices will add to short-term fiscal pressures.

The rating agency further highlighted that the current account deficit (CAD), which is the difference between inflow and outflow of foreign currency, will widen but will not jeopardise India's external position; and the gap will remain significantly narrower than five years ago. Agency is expecting that the CAD to widen to 2.5 per cent of Gross Domestic Product (GDP) in the FY19, from 1.5 per cent in fiscal 2018, driven by higher oil prices and robust non-oil import demand.

However, Moody's stated that growth prospects remain in line with the economy's potential, around 7.5 per cent this year and next. Besides, in last year, it had upped India's sovereign rating for the first time in over 13 years to 'Baa2' with a stable outlook, saying that growth prospects have improved with continued economic and institutional reforms.

The CNX Nifty is currently trading at 11671.35, down by 20.55 points or 0.18% after trading in a range of 11656.80 and 11698.80. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 1.72%, UPL up by 1.68%, ITC up by 1.45%, Bharti Airtel up by 1.33% and Hindalco was up by 1.12%. On the flip side, Tech Mahindra down by 1.82%, HPCL down by 1.80%, Axis Bank down by 1.47%, HCL Technology down by 1.47% and Reliance Industries was down by 1.42% were the top losers.

Asian markets were trading mostly in red; Straits Times slipped 23.17 points or 0.72% to 3,220.75, Taiwan Weighted declined 2.45 points or 0.02% to 11,097.12, Hang Seng fell 223.31 points or 0.79% to 28,193.13, Shanghai Composite dropped 22.44 points or 0.82% to 2,746.85, Jakarta Composite was down by 0.35 points or 0.01% to 6,064.80.

On the other side, KOSPI gained 0.01 points to 2,309.04 and Nikkei 225 was up by 34.71 points or 0.15% to 22,882.93.