Markets trade lower with cut of around half a percent in early deals

Indian equity markets made negative start and are trading lower with cut of around half a percent in early deals on Thursday amid weak economic data. The government data showed that growth of eight core industries dropped to 0.2 per cent in June mainly due to a contraction in oil-related sectors as well as in cement production. The eight core sector industries - coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity - had expanded by 7.8 per cent in June last year. Also, the Controller General of Accounts (CGA) data showed that the government's fiscal deficit touched Rs 4.32 trillion for the June quarter, which is 61.4 per cent of the budget estimate for 2019-20 fiscal. In absolute terms, the fiscal deficit, the gap between expenditure and revenue, was Rs 4.32 trillion at June-end. Benchmarks indices were trading below their crucial levels of 37,300 (Sensex) and 11,100 (Nifty). Besides, investors were eyeing manufacturing PMI data to be out later in the day.

Global cues also remained lackluster with all the Asian markets were trading lower as a private survey showed Chinese factory activity contracted in July. The Caixin/Markit factory Purchasing Managers’ Index came in at 49.9. PMI readings above 50 indicate expansion, while those below that signal contraction. Besides, trade data for July showed South Korean exports fell 11% on-year. Moreover, the US markets closed in red on Wednesday after US Federal Reserve Chair Jerome Powell said Wednesday's easing was ‘not the beginning of a long series of rate cuts’.

Back home, on the sectoral front, auto stocks were in focus, amid monthly sales numbers. Besides, Ind-Ra said that automobile manufacturers in the country slashed production by 11 percent in April-June period this fiscal over the year-ago period amid the industry facing the worst slowdown with sales declining month after month. In scrip specific development, Escorts trading in red as its Agri Machinery Segment (EAM) reported 13.4 fall in tractor sale at 4,860 tractors sold in July 2019 against 5,610 tractors sold in July 2018. However, Dilip Buildcon trading higher on receiving the letter of acceptance (LoA) from the Ministry of Road Transport & Highways, New Delhi for a new EPC project in the state of Karnataka.

The BSE Sensex is currently trading at 37295.90, down by 185.22 points or 0.49% after trading in a range of 37238.48 and 37387.18. There were 5 stocks advancing against 26 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index declined 0.04%, while Small cap index was up by 0.06%.

The top gaining sectoral indices on the BSE were Utilities up by 0.70%, Power up by 0.53%, Realty up by 0.18%, Consumer Durables up by 0.13% and Telecom was up by 0.04%, while Metal down by 1.93%, Basic Materials down by 1.25%, Auto down by 0.47%, Healthcare down by 0.41% and Energy was down by 0.41% were the losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 1.61%, Indusind Bank up by 1.04%, ICICI Bank up by 0.31%, Asian Paints up by 0.14% and Maruti Suzuki up by 0.07%. On the flip side, Vedanta down by 2.76%, Yes Bank down by 1.86%, Tech Mahindra down by 1.62%, Tata Motors down by 1.55% and Tata Steel down by 1.39% were the top losers.

Meanwhile, the Controller General of Accounts (CGA) in its latest data has showed that the government's fiscal deficit or the gap between the government's expenditure and revenue touched 61.4% of the Budget Estimate (BE) in the first quarter (April-June) of fiscal year 2019-20 (FY20). In absolute terms, the fiscal deficit was Rs 4.32 trillion at June-end. It was 68.7% of 2018-19 BE in the year-ago period. The government estimates the fiscal deficit to be at Rs 7.03 trillion during 2019-20. It aims to restrict the fiscal deficit at 3.4% of the GDP in the current fiscal, same as the last financial year.

The data showed that revenue receipts of the government during April-June, 2019-20 was 14.4% of the BE. It was 15.5% of BE in the year-ago period. In absolute terms, revenue receipts stood at Rs 2.84 trillion at June-end 2019. During the entire year, the revenue receipts have been pegged at Rs 19.77 trillion. The capital expenditure was 18.8% of the BE as compared to 29% in the year-ago period.

Total expenditure during April-June period stood at Rs 7.21 trillion or 25.9% of BE. It was 29% of BE in the corresponding period last fiscal. The government has pegged its total expenditure during the fiscal ending March 2020 at Rs 27.84 trillion. The CAG said the fiscal deficit figure shown in monthly accounts during a financial year is not necessarily an indicator of fiscal deficit for the year as it gets impacted by temporal mismatch between flow of not-debt receipts and expenditure up to that month on account of various transitional factors both on receipt and expenditure side.

The CNX Nifty is currently trading at 11058.00, down by 60.00 points or 0.54% after trading in a range of 11040.65 and 11076.75. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were Wipro up by 3.69%, Power Grid up by 1.73%, Bharti Infratel up by 1.73%, Indusind Bank up by 1.33% and GAIL India up by 1.20%. On the flip side, UPL down by 3.49%, Vedanta down by 2.99%, Hindalco down by 2.78%, JSW Steel down by 2.23% and Yes Bank down by 1.81% were the top losers.

All the Asian counters are trading in red; Nikkei 225 declined 13.76 points or 0.06% to 21,507.77, Straits Times shed 3.75 points or 0.11% to 3,297.00, Hang Seng slipped 189.20 points or 0.68% to 27,588.55, Taiwan Weighted tumbled 90.42 points or 0.84% to 10,733.39, KOSPI decreased 2.45 points or 0.12% to 2,022.10, Jakarta Composite slipped 2.46 points or 0.04% to 6,388.05 and Shanghai Composite was down by 22.88 points or 0.78% to 2,909.63.