Benchmarks trade above water in early deals

Indian equity benchmarks made a cautious start but somehow managed to keep their head above water in early deals on Wednesday, as traders took some support with Moody’s Investors Service’s report that the sharp depreciation in rupee’s valuation is unlikely to impact India’s sovereign credit profile as rupee-denominated government bonds and robust foreign exchange reserves mitigate the risk. Market participants also got some relief with the Finance Ministry’s statement that the decision to double the limit to Rs 20 lakh for filing applications in debt recovery tribunals will help them focus on high value matters leading to quicker recovery of bad loans. However, gains remain capped as traders remained on sidelines ahead of macroeconomic data such as Index of Industrial Production (IIP) and Consumer Price Index (CPI) to be announced after the market hours.

On the global front, Asian markets are trading mostly in red at this point of time, as investors’ confidence was chilled by the latest round of verbal threats in an intensifying US-China trade conflict. The US markets shrugged off trade worries and ended higher on Tuesday as gains in technology stocks helped the markets to regain footing and curbed losses in the materials and industrials sectors due to fears of an escalation in Sino-US trade spat.

Back home, the power stocks declined despite the Supreme Court asking banks to maintain status quo and not to initiate insolvency proceedings against loan defaulting power companies in the country. Steel sector stocks edged lower despite the Steel Ministry’s statement that India is hopeful of occupying the second slot in global steel output after China while the government has also taken steps to encourage secondary steel producers to boost performance.

The BSE Sensex is currently trading at 37479.64, up by 66.51 points or 0.18% after trading in a range of 37388.65 and 37638.16. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.21%, while Small cap index was down by 0.55%.

The top gaining sectoral indices on the BSE were FMCG up by 1.53%, Power up by 0.69%, Utilities up by 0.63%, IT up by 0.63% and TECK was up by 0.49%, while Realty down by 1.16%, Consumer Durables down by 0.78%, Telecom down by 0.67%, Metal down by 0.55% and Bankex was down by 0.50% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid Corporation up by 2.94%, ITC up by 1.87%, Hindustan Unilever up by 1.29%, Adani Ports &Special up by 1.25% and Wipro up by 0.96%. On the flip side, Tata Motors down by 1.98%, Axis Bank down by 1.98%, Tata Motors - DVR down by 1.30%, Tata Steel down by 1.29% and ICICI Bank down by 1.29% were the top losers.

Meanwhile, the State Bank of India (SBI) in its Ecowrap report has stated that recent rise in petrol and diesel prices coupled with continuing plunge in the Indian rupee is likely to give state governments a windfall gain of around Rs 22,700 crore over and above the budget estimates for current fiscal. It said the windfall gain is due to the value added tax (VAT) levied by the state governments on petrol and diesel.

As per the report, this windfall gain will have positive impact on state finances, which might push down the states’ fiscal deficit by 15-20 bps, other things remaining unchanged. The report estimated that since the states are having an incremental revenue over the budgeted one, they could cut on an average petrol prices by Rs 3.20 /litre and diesel by Rs 2.30/litre, without affecting their revenue arithmetic.

The Ecowrap report noted that an increase of $1 a barrel in crude price translates to Rs 1,513 crore revenue gain on an average to all the major 19 states. It added that states like Maharashtra, Madhya Pradesh, Punjab, Tamil Nadu, Andhra Pradesh, Rajasthan and Karnataka have the privilege to cut petrol prices by at least Rs 3 from their existing rates and Rs 2.5 on diesel.

The CNX Nifty is currently trading at 11294.65, up by 7.15 points or 0.06% after trading in a range of 11268.35 and 11340.10. There were 26 stocks advancing against 23 stocks declining on the index, while 1 stock remained unchanged.

The top gainers on Nifty were Power Grid Corporation up by 2.33%, ITC up by 1.88%, Hindustan Unilever up by 1.41%, Bajaj Finserv up by 1.40% and Grasim Industries up by 1.20%. On the flip side, HPCL down by 2.97%, Indian Oil Corporation down by 2.02%, Titan Company down by 1.97%, Axis Bank down by 1.96% and Tata Motors down by 1.89% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 decreased 105.61 points or 0.47% to 22,559.08, Taiwan Weighted declined 66.97 points or 0.63% to 10,685.33, Straits Times slipped 3.36 points or 0.11% to 3,106.55, Hang Seng shed 104.66 points or 0.4% to 26,317.89, KOSPI fell 8.60 points or 0.38% to 2,274.60 and Shanghai Composite was down by 8.91 points or 0.34% to 2,655.89.

On the flip side, Jakarta Composite was up by 23.51 points or 0.4% to 5,854.63.