Key gauges make pessimistic start on Budget day

Indian equity benchmarks made a pessimistic start as traders remained on sidelines ahead of Union Budget 2020 to be announced later in the day. The street is expecting that the government may increase state spending on infrastructure and offer some tax incentives in its Budget 2020, aiming to get growth back up from its lowest in a decade. Sentiments remained cautious on report that the government’s fiscal deficit touched 132.4% of the full-year target at December-end mainly due to slower pace of revenue collections. The Controller General of Accounts (CGA) data showed that in actual terms, the fiscal deficit or gap between expenditure and revenue was Rs 931,725 crore. The government aims to restrict the gap at 3.3% of the GDP or Rs 703,760 crore in the year ending March 2020. However, losses remained capped with report that growth of eight core industries recovered to 1.3% in December 2019 after remaining in the negative zone in the previous four months helped by expansion in production of coal, fertiliser and refinery products. Traders also took some solace with report that GST collections have crossed the Rs 1 trillion mark for the third month in a row in January with improved compliance and plugging of evasion.

There are no cues from regional front as all the markets in the world remained closed on Saturday. The US markets ended significantly lower on Friday amid lingering concerns about the coronavirus outbreak, as the death toll from the disease continues to rise.

Back home, the Reserve Bank of India (RBI) data showed that the country's foreign exchange reserves reached a life-time high of $466.693 billion after a massive $4.535 billion spike in the week to January 24. On the sectoral front, sugar stocks remained in focus as according to All India Sugar Trade Association (AISTA), sugar production is estimated to fall almost 17.5 per cent from 33.2 MT last year to 27.4 MT in the ongoing season.

The BSE Sensex is currently trading at 40600.42, down by 123.07 points or 0.30% after trading in a range of 40444.48 and 40753.18. There were 11 stocks advancing against 18 stocks declining on the index, while 1 stock remains unchanged on the index on the index.

The broader indices were trading mixed; the BSE Mid cap index gained 0.07%, while Small cap index was down by 0.11%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.65%, Realty up by 0.57%, FMCG up by 0.49%, Auto up by 0.25% and Healthcare was up by 0.12%, while Power down by 1.63%, Metal down by 1.22%, Utilities down by 1.00%, TECK down by 0.61% and Telecom was down by 0.57% were the top losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 1.48%, Asian Paints up by 0.46%, Ultratech Cement up by 0.45%, Maruti Suzuki up by 0.40% and Sun Pharma Industries up by 0.30%. On the flip side, Power Grid Corporation down by 4.04%, Tech Mahindra down by 2.81%, Tata Steel down by 2.29%, NTPC down by 1.86% and Kotak Mahindra Bank down by 0.98% were the top losers.

Meanwhile, the Controller General of Accounts’ data (CGA) has showed that the government's fiscal deficit touched 132.4 per cent of the full-year target at December-end mainly due to slower pace of revenue collections. In actual terms, the fiscal deficit or gap between expenditure and revenue was Rs 9,31,725 crore. The deficit was 112.4 per cent of 2018-19 Budget Estimate (BE) in the corresponding period. Besides, the government aims to restrict the gap at 3.3 per cent of the Gross Domestic Product (GDP) or Rs 7,03,760 crore in the year ending March 2020.

As per the data, the government's revenue receipts were Rs 11.46 lakh crore or 58.4 per cent of the 2019-20 BE. In the same period last fiscal, the collections were 62.8 per cent of the BE. The data further revealed that total expenditure was 75.7 per cent of BE or Rs 21.09 lakh crore. During the corresponding period in 2018-19, the expenditure was 75 per cent of the BE. Of the total spending, the capital expenditure was 75.6 per cent of the BE, higher than 70.6 per cent of the estimates during the same period in 2018-19.

Meanwhile, the Medium Term Fiscal Policy (MTFP) Statement presented with the Budget 2019-20, had pegged the fiscal deficit target for 2019-20 at 3.3 per cent of GDP, which was further expected to follow a gradual path of reduction and attain the targeted level of 3 per cent of GDP in 2020-21, and continue at the same level in 2021-22. In September 2019, the government had decided to lower tax rate for corporates, taking an estimated hit of Rs 1.45 lakh crore on its revenue mobilisation.

The CNX Nifty is currently trading at 11932.15, down by 29.95 points or 0.25% after trading in a range of 11880.65 and 11944.70. There were 17 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were Hindustan Unilever up by 2.42%, GAIL India up by 2.37%, Bajaj Finserv up by 1.16%, BPCL up by 0.94% and Indian Oil Corporation up by 0.79%. On the flip side, Power Grid Corporation down by 4.12%, Tech Mahindra down by 2.67%, Tata Steel down by 2.38%, NTPC down by 1.82% and Vedanta down by 1.60% were the top losers.