Benchmarks trade higher amid positive global cues

Indian equity benchmarks made optimistic start and are trading higher with gains of around 0.25% each in early deals on Monday as the government stuck to its gross borrowing target for the second half of this fiscal. Gains in Oil & Gas, PSU and Bankex stocks pushed the markets higher, while losses in Telecom, TECK and IT stocks kept the upside in check. Traders took encouragement, with report that the government has stayed with the borrowing plan for the fiscal, as announced in the budget, sending a strong signal that it will try and meet the fiscal deficit target despite a sharp cut in corporate tax rate that is expected to cost Rs 1.45 lakh crore. The finance ministry said it will borrow Rs 2.68 lakh crore in the second half of the fiscal, having borrowed Rs 4.42 crore in the first half, of the total planned Rs 7.1 lakh crore for FY20. Also, India’s fiscal deficit touched Rs 5.54 lakh crore for April-August period of FY20, which was 78.7% of the Budget Estimate (BE) for 2019-20, while it was at 86.5% of the 2018-19 BE in corresponding month a year ago. Some support also came in with report that current account deficit (CAD) narrowed to $14.30, 2% of GDP, in Q1 FY20, against $15.80 billion in the year-ago quarter, on account of higher invisible receipts and subdued oil prices.

However, upside remained capped with the Commerce and Industry Ministry’s data showing that the eight core industries in August contracted to over three-and-half year low of 0.5%, due to decline in output of coal, crude oil, natural gas, cement, and electricity. Adding some cautiousness among market participants a private report stated that India’s real GDP growth for the current financial year is likely to be 5.2% as muted business confidence, subdued demand conditions and concerns in the financial sector are hurting investments.

Global cues also remained supportive with most of the Asian markets trading in green after a US Treasury Department spokeswoman denied reports the Trump administration is considering delisting Chinese companies from US stock exchanges at this time. Investors shrugged off the finding of a central bank survey showing that Japanese big manufacturers' business confidence fell to a six-year low in the July-September quarter. Meanwhile, Chinese and Hong Kong markets remained shut for the 70th anniversary of the founding of the People's Republic of China. Back home, on the sectoral front, the metal stocks were buzzing with India Ratings and Research’s report that the reduction in raw material prices since July 2019 will provide a major respite to India steel players. The auto sector stocks were in focus, reacting to their monthly sales numbers.

The BSE Sensex is currently trading at 38817.50, up by 150.17 points or 0.39% after trading in a range of 38766.51 and 38923.78. There were 19 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.35%, while Small cap index was up by 0.19%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 2.29%, PSU up by 1.68%, Bankex up by 1.18%, Capital Goods up by 0.86% and Power was up by 0.75%, while Telecom down by 1.43%, TECK down by 1.15%, IT down by 1.14%, Realty down by 0.89% and Metal was down by 0.51% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 5.43%, ICICI Bank up by 1.98%, Mahindra & Mahindra up by 1.86%, Hindustan Unilever up by 1.59% and Axis Bank up by 1.58%. On the flip side, HCL Technologies down by 2.06%, Tata Steel down by 1.33%, Bharti Airtel down by 1.28%, TCS down by 1.21% and Infosys down by 1.19% were the top losers.

Meanwhile, the Controller General of Accounts (CGA) in its latest data has showed that India’s fiscal deficit touched Rs 5.54 lakh crore in the first five months (April-August) of the current financial year 2019-20 (FY20), which was 78.7% of the Budget Estimate (BE) for 2019-20. It was at 86.5% of the 2018-19 BE in corresponding month a year ago. In absolute terms, the fiscal deficit or the gap between expenditure and revenue was Rs 5,53,840 crore as on August 31. Besides, the government has pegged the fiscal deficit for FY20 at Rs 7.03 lakh crore, while aiming to restrict the deficit at 3.3% of the gross domestic product (GDP).

According to the CGA data, revenue receipts of the government during the April-August 2019 period rose to 30.7% of the BE compared to 26.9% in the corresponding period last year. In absolute terms, revenue receipts stood at Rs 6.03 lakh crore at the end of August. For the entire 2019-20, the revenue receipts has been pegged at Rs 19.62 lakh crore.

The capital expenditure was 40.3% of the BE as compares with 44.1% in the year-ago period. Total expenditure during the April-August period stood at Rs 11.75 lakh crore or 42.2% of the BE, it was 43.8% of BE in the corresponding period of the previous financial year. The government has pegged its total expenditure for the financial year 2019-20 at Rs 27.86 lakh crore.

However, the government has let go of its revenues to the tune of Rs 1.45 lakh crore by announcing cuts in corporate tax, aimed at boosting the faltering economy. Economic Affairs Secretary Atanu Chakraborty has said the government maintains the fiscal glide path with the borrowing target of Rs 2.68 lakh crore for the second half of this financial year.

The CNX Nifty is currently trading at 11498.50, up by 24.05 points or 0.21% after trading in a range of 11485.30 and 11554.20. There were 29 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were BPCL up by 5.93%, Yes Bank up by 5.56%, Indian Oil Corporation up by 4.38%, ICICI Bank up by 1.66% and Mahindra & Mahindra up by 1.61%. On the flip side, Coal India down by 2.28%, HCL Technologies down by 2.20%, Tata Steel down by 1.93%, Indusind Bank down by 1.49% and Bharti Airtel down by 1.38% were the top losers.

Asian markets were mostly trading in green; Nikkei 225 surged 163.89 points or 0.75% to 21,919.73, Taiwan Weighted strengthened 113.38 points or 1.05% to 10,943.06, Straits Times advanced 32.99 points or 1.06% to 3,152.98 and KOSPI rose 10.45 points or 0.51% to 2,073.50. On the flip side, Jakarta Composite was down by 8.35 points or 0.14% to 6,160.75.