Benchmarks trade near at all time highs; Sensex hits 42K mark

Indian equity benchmarks made optimistic start and soon gathered pace to hit fresh lifetime highs in early deals on Thursday. Markets were trading near intra-day high levels amid gains in FMCG, Healthcare and Realty stocks. Sensex hit the 42,000 mark for the first time while Nifty touched a new high with mid-cap and small-cap stocks extending their rally. Traders remained optimistic on the corporate earnings. Some support came in with NITI Aayog vice chairman Rajiv Kumar’s statement that the government is likely to take more measures to deal with the problem of financial sector. Investors largely overlooked data showing that India's merchandise exports fell for the fifth straight month. The commerce and industry ministry data showed that exports contracted by 1.8% in December 2019 to $27.36 billion, as processed petroleum exports saw lower receipts and broad-based decline continued to plague all major foreign exchange earning sectors. Imports too declined by 8.83% $38.61 billion, bringing down the trade deficit to $11.25 billion during the month under review.

On the global front, Asian markets were trading mixed as investors digested details of the phase one trade deal that was signed by between the US and China overnight. The deal calls for China to purchase $200 billion worth of US goods over the next two years, including up to $50 billion worth of agricultural products. Though, investors also weighed the likely impact of Trump administration's decision to leave the 25 percent tariff on $250 billion worth of Chinese imports in place till the second phase of the trade deal.

Back home, Infrastructure stocks were in focus with report that the allocation for the highway sector is likely to be raised by Rs 8,000-10,000 crore in the upcoming Budget. In stock specific development, Kotak Mahindra Bank gained as its wholly owned subsidiary -- Kotak Mahindra Prime has executed a Share Purchase Agreement, for sale of its entire equity stake of 5.56% in Equifax Credit Information Services. On the other hand, Jet Airways India touched lower circuit limit amid reports that London-based Hinduja group pulled out of the race for Jet Airways, leaving only two contenders-South America’s Synergy Group and New Delhi-based Prudent ARC-in the fray to acquire the airline that shut operations in April last year.

The BSE Sensex is currently trading at 42032.39, up by 159.66 points or 0.38% after trading in a range of 41885.65 and 42032.39. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.56%, while Small cap index was up by 0.66%.

The top gaining sectoral indices on the BSE were FMCG up by 0.85%, Healthcare up by 0.66%, Realty up by 0.64%, Bankex up by 0.53% and Telecom was up by 0.49%, while Metal down by 1.13% and Basic Materials was down by 0.08% were the only losing indices on BSE.

The top gainers on the Sensex were Kotak Mahindra Bank up by 1.22%, Hindustan Unilever up by 1.22%, Nestle up by 1.05%, Sun Pharma Industries up by 0.98% and Reliance Industries up by 0.77%. On the flip side, NTPC down by 1.33%, Tata Steel down by 1.07%, Hero MotoCorp down by 0.92%, Indusind Bank down by 0.54% and Mahindra & Mahindra down by 0.42% were the top losers.

Meanwhile, expressing concern over fiscal condition of India, former finance secretary Subhash Chandra Garg has said the country’s real fiscal deficit may be higher at 4.5-5% of Gross Domestic Product (GDP) in fiscal year 2019-20 (FY20). Spike in deficit is likely due to an expected shortfall in revenue, and higher spending. Besides, the government had pegged India’s FY20 deficit in the budget presented in July at 3.3% of GDP.

Garg said that a large portion of the deficit is being used to finance consumption expenditure, which is typically not a healthy practice. Factoring in off-budget expenditures including for bank recapitalisation, food subsidies, irrigation schemes and sanitation schemes, he estimated actual fiscal deficit of the Centre at 4.39% in FY18 (reported 3.5%) and 4.66% in FY19 (3.4%). He estimates the deficit at 4.5-5% in FY20 - budget estimate 3.3 per cent, which is likely to be revised to at least 3.5 per cent.

Former finance secretary sees a shortfall of Rs 2-2.5 lakh crore on revenue side in FY20 and off-budget financing at Rs 1.75-2.25 lakh crore. He said small savings schemes should be discontinued since they disrupted monetary policy transmission. He also criticised policies relating to fiscal deficit and debt management, saying less than 25% of the Centre’s annual borrowings is utilised for real capex as consumption expenditure is taking precedence.

The CNX Nifty is currently trading at 12384.70, up by 41.40 points or 0.34% after trading in a range of 12345.10 and 12389.05. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 2.01%, Nestle up by 1.57%, Hindustan Unilever up by 1.35%, Kotak Mahindra Bank up by 1.16% and Power Grid Corporation up by 1.11%. On the flip side, Vedanta down by 1.82%, NTPC down by 1.41%, JSW Steel down by 1.31%, Hindalco down by 1.24% and Tata Steel down by 1.13% were the top losers.

Asian markets are trading mixed; Taiwan Weighted dropped 35.02 points or 0.29% to 12,056.86, Hang Seng decreased 21.27 points or 0.07% to 28,752.32, Shanghai Composite declined 8.66 points or 0.28% to 3,081.38 and Jakarta Composite lost 1.99 points or 0.03% to 6,281.38. On the flip side, KOSPI rose 6.04 points or 0.27% to 2,237.02, Straits Times advanced 7.20 points or 0.22% to 3,264.18 and Nikkei 225 was up by 11.80 points or 0.05% to 23,928.38.