Benchmarks trade in fine fettle in early deals

Indian equity benchmarks are trading in green in morning deals tracking firm global cues after the US Federal Reserve signaled a pause in interest rate hikes. Traders took encouragement with SBI Research’s report that the government meeting the fiscal targets this year and for FY20, fiscal deficit is likely to be Rs 6.72 trillion or 3.2 percent of GDP, assuming a modest 11.7 percent of nominal GDP growth. It added that for FY19 the fiscal gap will be met at the budgeted 3.3 percent. Some support also came with Commerce Minister Suresh Prabhu’s statement that the government will release the new e-commerce policy soon which is awaiting approval from the Department of Industrial Policy and Promotion (DIPP). Traders took  note of a report that the GST officials are working out mechanism to prompt taxmen to initiate profiteering complaints, which could be taken up for further investigation by the Directorate General of Anti-Profiteering.

Global cues too remained supportive with Asian markets rallying at this point of time following overnight gains on Wall Street amid easing growth concerns. The US markets rose on Wednesday after the Federal Reserve said it would be patient in lifting borrowing costs further this year, reassuring investors worried about a slowing economy.

Back home, textiles sector stocks edged higher with India Ratings’ report that India's textiles sector may see higher growth following robust domestic demand and depreciating rupee value. It has maintained a stable outlook for the textile sector for 2019-20 following strong domestic demand, waning impact of the disruptions due to GST and demonetisation and rising exports aided by a weak rupee. In scrip specific developments, NTPC gained on reporting marginal rise in Q3 net profit and L&T edged higher as its arm bagged two EPCC contracts from IOC.

The BSE Sensex is currently trading at 35758.15, up by 166.90 points or 0.47% after trading in a range of 35746.56 and 35840.82. There were 20 stocks advancing against 11 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index slipped 0.19%, while Small cap index was up by 0.43%.

The top gaining sectoral indices on the BSE were Energy up by 1.10%, Oil & Gas up by 0.70%, PSU up by 0.67%, IT up by 0.66% and Utilities up by 0.63%, while there were no losers on the BSE sectoral front.

The top gainers on the Sensex were ICICI Bank up by 1.68%, Reliance Industries up by 1.49%, SBI up by 1.36%, Axis Bank up by 1.35% and Tata Motors up by 1.26%. On the flip side, Bajaj Finance down by 2.33%, Yes Bank down by 1.08%, Bajaj Auto down by 0.85%, HCL Tech down by 0.70% and Hero MotoCorp down by 0.64% were the top losers.

Meanwhile, SBI Research in its latest report has stated that the government is likely to meet the fiscal deficit target this year and pegged fiscal deficit at Rs 6.72 trillion or 3.2% of gross domestic product (GDP) for next fiscal year (2019-20), assuming a moderate nominal GDP growth of 11.7%. It added that the fiscal gap will be met at the budgeted 3.3 percent for FY19.

The report noted that the government’s gross market borrowing will be Rs 6.50 trillion in FY20, while net market borrowing to be at Rs 4.13 trillion, less than FY19 estimate of Rs 4.20 trillion. in order to keep the redemptions in check, the report estimates switching of securities worth around Rs 30,000-35,000 crore, which would bring in gross borrowing near the FY19 budgeted target of Rs 6.05 trillion. It is also expecting minimum buybacks in FY20 as the government may be carrying forward a minimal cash balance into FY20. The government has also dipped into small savings scheme to meet a part of its expenditure in FY19. As against the budgeted amount of Rs 75,000 crore (revised later to Rs 1 trillion), borrowings through small savings have reached Rs 45,396 crore by November 2018.

SBI Research said a large funding through the National Small Savings Fund (NSSF) is possible owing to interest gap between bank deposits and the small saving rates. The gap between the small saving interest rate (average of PPF and Sukanya Samridhi accounts rates) and average term deposit of year maturity being offered by banks still remains around 98 basis points. However, this may make it difficult for banks to reduce deposit rates. In the past few months, with deposit growth significantly lagging credit growth, banks have been increasing deposit rates to avoid deposit flight.

The CNX Nifty is currently trading at 10684.15, up by 32.35 points or 0.30% after trading in a range of 10681.95 and 10707.85. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 1.85%, GAIL India up by 1.79%, ICICI Bank up by 1.53%, SBI up by 1.41% and Tata Steel up by 1.40%. On the flip side, Zee Entertainment down by 3.03%, Indiabulls Housing down by 2.96%, Bajaj Finance down by 2.18%, Bajaj Finserv down by 1.68% and Adani Ports & SEZ down by 1.61% were the top losers.

All the Asian markets are trading in green; Nikkei 225 surged 264.38 points or 1.29% to 20,820.92, Straits Times rose 12.15 points or 0.38% to 3,186.53, Hang Seng soared 334.48 points or 1.21% to 27,977.33, KOSPI added 5.19 points or 0.24% to 2,211.39, Jakarta Composite increased 53.23 points or 0.82% to 6,517.42 and Shanghai Composite was up by 16.26 points or 0.63% to 2,591.84.