Benchmarks trade marginally higher in early deals

Indian equity benchmarks have made a cautious start and are trading higher, after oscillating between gains and losses, in early deals on Wednesday. Traders took encouragement with Vice-chairman of Niti Aayog Rajiv Kumar’s statement that the target of achieving an economy of $5 trillion within 2024-25 is eminently doable and the private sector would have to take the lead. He added that there are several initiatives mentioned in the budget which point out to the willingness of the government to work along with the private sector. However, gains remained capped as anxiety spread among market participants with Moody’s Investors Service’s statement that weak growth prospects for India will complicate the government's fiscal consolidation efforts, weighing on the sovereign's credit quality. Traders were also concerned as Crisil in its earnings preview stating that India Inc will see the slowest quarterly revenue growth in two years, which will more than halve to 6 percent from 14-15 percent, due to a deceleration in consumption and lower realisations.

On the global front, Asian counterparts were trading mostly in green amid investors awaited Fed chairman Jerome Powell's testimony before Congress for further cues on Federal Reserve’s monetary policy. Back home, in scrip specific development, Tata Consultancy Services is trading in red after reporting revenue for the June quarter that was materially below the Street’s estimates. Revenue stood at $5.49 billion, an increase of merely 1.6% over the seasonally weaker March quarter. However, Himachal Futuristic Communications (HFCL) is trading in green on receiving a Purchase Order (PO) worth Rs 186.90 crore approximately from Bharat Sanchar Nigam.

The BSE Sensex is currently trading at 38807.75, up by 76.93 points or 0.20% after trading in a range of 38610.29 and 38809.33. There were 16 stocks advancing against 14 stocks declining, while one stock remains unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index gained by 0.13%, while Small cap index was up by 0.25%.

The top gaining sectoral indices on the BSE were FMCG up by 0.51%, Consumer Durables up by 0.44%, Utilities up by 0.44%, Bankex up by 0.41% and Consumer Discretionary Goods & Services was up by 0.29%, while Industrials down by 0.42%, Basic Materials down by 0.20%, Telecom down by 0.17%, Capital Goods down by 0.15% and Metal was down by 0.13% were the losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 1.37%, HCL Tech up by 1.35%, Kotak Mahindra Bank up by 0.86%, Tech Mahindra up by 0.84% and Asian Paints up by 0.61%. On the flip side, Tata Motors down by 1.57%, Bajaj Finance down by 1.54%, Tata Motors - DVR down by 1.14%, TCS down by 0.84% and Vedanta down by 0.62% were the top losers.

Meanwhile, expressing cautiousness over India’s sovereign's credit, Moody's Investors Service in its latest report has said that weak growth prospects for the country (Baa2 stable) will complicate the government's fiscal consolidation efforts, weighing on the sovereign's credit quality. The 2019-20 Budget presented in Parliament on July 05, had projected to contain fiscal deficit at 3.3 per cent of Gross Domestic Product (GDP), lower than 3.4 per cent estimated in the interim Budget. It also projected a more gradual decline in government debt.

Moody's said delivering on fiscal consolidation and raising incomes will be extremely challenging for India's authorities, particularly since growth is likely to remain weak over the coming year.  However, it highlighted that budget announcements are credit positive for public sector banks, non-bank finance companies (NBFCs), infrastructure sector, property developers, some domestic producers and securitisation transactions.

As per the report, the Rs 70,000 crore capital infusion into public sector banks and a temporary credit guarantee facility to alleviate tight liquidity for NBFCs are measures that are credit positive for the relevant entities and should encourage the flow of credit to the economy and support growth. It added that the hike in customs duties on certain imported products will increase the competitiveness of domestic producers, while new incentives for the purchase of affordable homes will be credit positive for Indian property developers.

The CNX Nifty is currently trading at 11573.00, up by 17.10 points or 0.15% after trading in a range of 11516.30 and 11578.25. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 2.19%, Coal India up by 1.66%, GAIL India up by 1.43%, HCL up by 1.16% and Yes Bank up by 1.09%. On the flip side, Tata Motors down by 1.73%, Bajaj Finance down by 1.62%, Hindalco down by 1.31%, Ultratech Cement down by 0.95% and TCS down by 0.71% were the top losers.

Asian markets were trading mostly in green; Straits Times surged 19.71 points or 0.59% to 3,349.17, Hang Seng strengthened 89.13 points or 0.32% to 28,205.41, Taiwan Weighted gained 58.28 points or 0.54% to 10,761.06, Kospi advanced 14.60 points or 0.71% to 2,066.63 and Jakarta Composite soared 16.10 points or 0.25% to 6,404.42. On the flip side, Nikkei 225 slipped 9.46 points or 0.04% to 21,555.69 and Shanghai Composite was down by 0.55 points or 0.02% to 2,927.68.