Local equities continue sluggish trend

Local equity benchmarks continued their sluggish trade in morning session, with Sensex and Nifty falling more than 190 and 70 points, respectively. Traders remained concern with a private report stating that Indian bonds are pitted against a familiar foe: likely record debt sales by the government to finance populist measures before national elections due by May. Market participants reacted negatively to Moody’s Investors Service’s report that measures taken by the government to support MSMEs and those being planned to help farmers ahead of polls will potentially cause fiscal deficit to slip to 3.4% of GDP this fiscal, against the targeted 3.3%. However, traders failed to get support from Prime Minister Narendra Modi statement that India is on the way to becoming the fifth largest economy in the world and the government is taking reform measures on a ‘daily basis’ to further improve investment climate in the country. Besides, Union Commerce and Industry Minister Suresh Prabhu stated that new policies of the government will ensure the doubling of exports, currently pegged at $321 billion, in a few years.

On the global front, Asian market were trading mostly in green, following the positive lead from Wall Street Friday after US President Donald Trump announced an agreement to temporarily end the record-setting 35-day-old government shutdown. Back home, the cabinet is likely to approve a package for farmers to boost their income and address distress in the farm sector, the move will come ahead of the general elections.

The BSE Sensex is currently trading at 35834.14, down by 191.40 points or 0.53% after trading in a range of 35791.30 and 36124.26. There were 7 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 1.66%, while Small cap index was down by 1.66%.

The few gaining sectoral indices on the BSE were Capital Goods up by 0.55%, TECK up by 0.28%, IT up by 0.19%, while Basic Materials down by 1.82%, Healthcare down by 1.82%, Auto down by 1.67%, Power down by 1.58% and Telecom was down by 1.49% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 2.30%, TCS up by 1.61%, Kotak Mahindra Bank up by 0.96%, Asian Paints up by 0.93% and Hindustan Unilever was up by 0.53%. On the flip side, ICICI Bank down by 3.28%, Yes Bank down by 2.89%, Bajaj Finance down by 2.32%, Bajaj Auto down by 1.97% and Tata Motors - DVR was down by 1.88% were the top losers.

Meanwhile, Moody’s Investors Service has stated that steps taken by the government to help Micro- Small and Medium Enterprises (MSMEs) and the measures being planned to support farmers will increase the risk of fiscal slippage and push deficit to 3.4 per cent of the gross domestic product (GDP) in the current financial year (FY19). The government had budgeted the fiscal deficit for the current financial year at 3.3 per cent of GDP. However, in the first eight months of current financial year (April-November), the deficit touched 114.8 per cent of the budget estimates.

The rating agency asserted that meeting the short-term fiscal objectives through one-off sources of revenue, such as special dividend from the Reserve Bank of India (RBI), and cuts in capital expenditure will denote low fiscal policy effectiveness.

Besides, Moody’s highlighted over the past month, India’s government announced a range of policies to support the incomes of small enterprises and low-income households. It is also considering additional steps to support farmers facing financial distress. In the absence of new revenue-boosting measures, the policies will collectively make it harder for the government to achieve its fiscal consolidation objectives.

The CNX Nifty is currently trading at 10705.60, down by 74.95 points or 0.70% after trading in a range of 10698.10 and 10804.45. There were 12 stocks advancing against 38 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 11.39%, Wipro up by 2.26%, Bharti Infratel up by 2.22%, Larsen & Toubro up by 1.98% and TCS was up by 1.53%. On the flip side, Adani Ports down by 9.74%, Indiabulls Housing down by 6.16%, Ultratech Cement down by 4.98%, ICICI Bank down by 3.71% and Cipla was down by 2.82% were the top losers.

Asian markets were trading mostly in green; Hang Seng increased 108.71 points or 0.39% to 27,677.90, Taiwan Weighted strengthened 40.56 points or 0.41% to 10,010.17, Shanghai Composite gained 8.42 points or 0.32% to 2,610.14, KOSPI rose 7.56 points or 0.35% to 2,185.29 and Straits Times was up by 5.19 points or 0.16% to 3,207.44.

On the other hand, Jakarta Composite dropped 8.88 points or 0.14% to 6,473.96, Nikkei 225 was down by 87.62 points or 0.42% to 20,685.94.