Profit booking, weak global cues drag local equities lower

Local equity benchmarks added losses to continue their weak trade in the morning session, hovering near the lowest point of the day, on account of selling in frontline counters accelerating losses as the number of coronavirus cases continue to mount and create uncertainty for the global economy. Traders reacted negatively to India Ratings and Research (Ind-Ra) report as it expects aggregate fiscal deficit of the states to come close to 3% of gross domestic product in FY21. In its note, it has revised the outlook on state finances to stable-to-negative for FY21 from stable. Traders took note of a report that Industry body FICCI’s report as its Economic Outlook Survey has projected the country's annual median GDP growth for 2019-20 at 5 per cent, in line with the projections made by the National Statistical Organisation (NSO). Growth is likely to improve to 5.5 per cent in 2020-21 as per the projections. Besides, a private report stated that the Indian economy is in a great position with a growing consumption story and a lot of untapped potential in terms of its big young population and a large talent pool.

On the global front, Asian markets are trading lower, after the US Federal Reserve kept interest rates unchanged, and as investors weighed developments in the spreading coronavirus outbreak. Back home, Union minister Nitin Gadkari urged industry players to cash in on the huge potential that 22 upcoming express highways hold in the areas of alternative fuel, electric highway and charging stations.

The BSE Sensex is currently trading at 40968.94, down by 229.72 points or 0.56% after trading in a range of 40940.74 and 41380.14. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.78%, while Small cap index was down by 0.76%.

The lone gaining sectoral indices on the BSE was Power up by 0.11%, while Telecom down by 1.59%, TECK down by 1.02%, Energy down by 1.02%, Healthcare down by 0.88% and FMCG was down by 0.86% were the top losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 1.13%, Power Grid up by 1.07%, HDFC up by 0.81%, NTPC up by 0.44% and Bajaj Finance was up by 0.44%. On the flip side, Bharti Airtel down by 1.70%, Tata Steel down by 1.45%, Sun Pharma down by 1.29%, IndusInd Bank down by 1.21% and Reliance Industries was down by 1.18% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) has said that state government finances may continue witnessing revenue pressure in financial year 2020-21 (FY21) on account of subdued economic growth. The agency has cut its outlook on state finances to stable-to-negative for FY21 from stable, citing higher revenue expenditure and outstanding GST compensation.

Ind-Ra has pegged states' aggregate fiscal deficit to be around 3 per cent of gross domestic product (GDP) in FY21, higher than the budgeted 2.6 per cent of GDP for FY20. It expects states' aggregate tax revenue (including devolutions from the central government) and revenue receipts to grow 11 per cent and 9.9 per cent, respectively, in FY21.

Besides, the agency expects the states' aggregate debt/GDP to rise to 27.5 per cent in FY21 from the budgeted 24.7 per cent for FY20. It mentioned states' aggregate debt burden would increase as states resort to fund the fiscal deficit by way of higher market borrowings. It estimates the gross market borrowings of states to increase to Rs 6.09 lakh crore in FY21 from its estimated Rs 5.96 lakh crore for FY20.

The CNX Nifty is currently trading at 12057.60, down by 71.90 points or 0.59% after trading in a range of 12050.20 and 12150.30. There were 8 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Hero MotoCorp up by 1.27%, Power Grid up by 1.22%, Eicher Motors up by 0.88%, HDFC up by 0.74% and was NTPC up by 0.53%. On the flip side, Yes Bank down by 4.98%, Zee Entertainment down by 2.44%, Bharti Airtel down by 1.66%, Tata Steel down by 1.51% and Sun Pharma was down by 1.47% were the top losers.

All Asian markets are trading lower, Taiwan Weighted dropped 664.04 points or 5.48% to 11,454.67, Hang Seng decreased 479.28 points or 1.76% to 26,681.35, Nikkei 225 slipped 458.61 points or 1.96% to 22,920.79, KOSPI fell 35.70 points or 1.63% to 2,149.58, Jakarta Composite lost 29.18 points or 0.48% to 6,083.87 and Straits Times trembled 17.89 points or 0.56% to 3,164.68.