Local equities continue to sink in red

Local equities added losses to continue their weak trade in the morning session on account of selling in frontline counters. The markets have drifted even below the psychological 39,100 (Sensex) and 11,700 (Nifty) levels and there are no signs of recovery. Barring IT stocks, there was selling across all sectoral indices. Adding to the pessimism, India Meteorological Department data showed that monsoon has covered almost the entire country, but three-fourths of MeT department’s sub-meteorological divisions still fall under the ‘deficient’ rainfall category. Traders remained anxious with a report that area sown under kharif crops was down by 27% at 234.33 lakh hectare amid deficient monsoon rainfall last month. Traders took note of finance ministry’s statement that the highest tax rate in India was still lower than many countries, including the US and China, and it was a worldwide phenomenon to ask the super-rich to pay extra tax. Traders failed to get any sense of relief from Finance Secretary Subhash Chandra Garg’s statement that the government will soon start the process of raising funds from overseas markets by issuing sovereign bonds in the second half of the fiscal.

On the global front, Asian markets were trading in red after a blockbuster US jobs report dashed hopes that the Federal Reserve would slash interest rates this month. Labor Department data showed that despite recent disappointing indicators, the world's top economy continues to show resilience as it created far more posts than expected in June. Back home, a report stated that the Centre has called a meeting of state agriculture ministers on June 08, ostensibly to discuss various flagship schemes like PM-Kisan, crop insurance and pension for farmers.

The BSE Sensex is currently trading at 39049.53, down by 463.86 points or 1.17% after trading in a range of 39038.27 and 39476.38. There were 5 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 1.27%, while Small cap index was down by 1.63%.

The only gaining sectoral index on the BSE was IT up by 0.08%, while Capital Goods down by 2.83%, PSU down by 2.66%, Industrials down by 2.32%, Auto down by 2.22% and Oil & Gas down by 2.21% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 6.24%, HCL Tech up by 2.20%, Infosys up by 0.31%, TCS up by 0.25% and Tech Mahindra was up by 0.21%. On the flip side, Hero MotoCorp down by 4.38%, ONGC down by 3.66%, Larsen & Toubro down by 3.57%, SBI down by 3.08% and Tata Motors - DVR was down by 2.95% were the top losers.

Meanwhile, expressing cautiousness over India’ fiscal deficit target, Moody's Investors Service has said that there are risks of the country missing 3.3% fiscal deficit target for the current financial year (FY20) if tax revenue underperforms projections, as it did last year. Besides, the Budget 2019-20 lowered fiscal deficit projection to 3.3% for FY20 from 3.4% targeted in the Interim Budget 2019-20 in February. The fiscal deficit, which is the gap between government expenditure and revenue, was 3.4% in 2018-19.

However, the rating agency said the headline deficit may be achieved but through reliance on one-off revenue such as disinvestments and transfers from the central bank, and off-budget spending. The government has pegged disinvestment target for the current financial year at Rs 1.05 lakh crore, up from Rs 90,000 crore projected in Interim Budget for 2019-20 in February.

Moody's said that in the Union Budget, the government announced a lower fiscal deficit target for fiscal 2020, while maintaining its support for growth and incomes. Achieving these competing goals will be challenging. It expect the economy to grow relatively slowly, despite the government's income support measures.

In addition to funding, an expansion of support for farmers, a new pension scheme and relief for small taxpayers, as previously announced, the latest Budget includes a Rs 70,000 crore recapitalisation of state-owned banks. It said this will support growth by encouraging the flow of credit to the economy, although simultaneously adding to government debt.

The CNX Nifty is currently trading at 11657.10, down by 154.05 points or 1.30% after trading in a range of 11656.25 and 11771.90. There were 5 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 5.56%, HCL Tech up by 1.99%, Bharti Infratel up by 0.71%, Infosys up by 0.37% and Tech Mahindra was up by 0.21%. On the flip side, Hero MotoCorp down by 4.43%, ONGC down by 4.12%, Larsen & Toubro down by 3.79%, Grasim Industries down by 3.66% and Indian Oil Corporation was down by 3.52% were the top losers.

All Asian markets were trading in red; Hang Seng decreased 517.91 points or 1.8% to 28,256.92, Nikkei 225 slipped 231.26 points or 1.06% to 21,515.12, Shanghai Composite declined 74.09 points or 2.46% to 2,936.97, Taiwan Weighted dropped 58.11 points or 0.54% to 10,727.62, Straits Times trembled 42.93 points or 1.28% to 3,323.88, KOSPI fell 37.92 points or 1.8% to 2,072.67 and Jakarta Composite was down by 25.27 points or 0.4% to 6,348.21.