Indian markets maintain upward momentum

Indian equity markets maintained their upward momentum in the afternoon session, following gains in Energy, Oil & Gas and Bankex stocks. Healthy buying was observed in blue-chip stocks like Reliance Industries, Axis Bank and SBI. Sentiments were encouraged with report that the government is planning to save about Rs 35,000 crore to help manage the fiscal load put by the production-linked incentive (PLI) and phased manufacturing program (PMP) schemes, its initiatives to attract investment into the country. Traders also took support with report that India's exports during the first week of September jumped 13.35 per cent year-on-year to 6.12 billion dollars. At the same time, imports declined by 21.37 per cent to 6.85 billion dollars. Consequently, the deficit during September 1 to 7 worked out to 730 million dollars.

On the global front; Asian markets were trading mixed on optimism as the US stocks rebounded after three day losing streak. Meanwhile, the speculators eyed on news from the European Central Bank, which was expected later in the day to keep its monetary policy unchanged. Back on street; the market breadth on BSE was positive, out of 2611 stocks traded, 1760 stocks advanced, while 688 stocks declined on the BSE, while 163 stocks remain unchanged.

The BSE Sensex is currently trading at 38739.21, up by 545.29 points or 1.43% after trading in a range of 38367.07 and 38748.41. There were 20 stocks advancing against 9 stocks declining, while 1 stock remains unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.61%, while Small cap index was up by 1.49%.

The top gaining sectoral indices on the BSE were Energy up by 4.40%, Oil & Gas up by 2.01%, Bankex up by 1.58%, PSU up by 0.93% and Realty was up by 0.89%, while Metal down by 1.39%, Consumer Durables down by 0.45% and Telecom was down by 0.18% were the only losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 5.11%, Axis Bank up by 2.76%, SBI up by 2.74%, Indusind Bank up by 2.47% and Bajaj Finserv was up by 2.12%. On the flip side, Tata Steel down by 2.14%, Titan Company down by 1.56%, Tech Mahindra down by 0.76%, Bajaj Auto down by 0.50% and Power Grid was down by 0.37% were the top losers.

Meanwhile, domestic rating agency ICRA in its latest report has said that not paying the full Goods and Services Tax (GST) compensations by the Centre is among the factors which may result in up to Rs 3 lakh crore cut in capital expenditure (capex) by the states in FY21. It noted that the borrowing alternative offered by the Centre to make up for the shortfall in the promised compensation will lead to the states' fiscal deficits widening to 4.25 - 5.52 percent.  It added that the compensation cess has been estimated at Rs 3 lakh crore in this current financial year, of which only Rs 65,000 crore has been collected, leaving a shortfall due to states of Rs 2.35 lakh crore.

The report further said in the GST Council meeting held on August 27, the government pegged the gap between the GST compensation requirement of the state governments for FY21 and the expected GST cess collections at Rs 2.35 lakh crore. It said the Centre had offered two options to the state governments for bridging this gap of Rs 2.35 lakh crore, which vary in terms of the amount that can be borrowed, the source of borrowing, rate of interest on borrowings, payment of interest, charge on cess collected after the five-year GST transition period ends in July 2022.

The rating agency cautions that the states may be forced to curtail their aggregate capital spending by as much as Rs 1-3.4 lakh crore in FY21, on account of the anticipated shortfalls in GST compensation and Central tax devolution (CTD), despite the options for additional borrowings put forth by the GoI. It can be noted that capital expenditure is considered as the most productive of any government's expenses because of its ability to lead to what is called trickle-down benefits.

The CNX Nifty is currently trading at 11415.55, up by 137.55 points or 1.22% after trading in a range of 11327.40 and 11424.00. There were 27 stocks advancing against 22 stocks declining, while 1 stock remains unchanged on the index.

The top gainers on Nifty were Reliance Industries up by 5.20%, SBI up by 2.82%, Axis Bank up by 2.78%, Indusind Bank up by 2.68% and Zee Entertainment was up by 2.32%. On the flip side, Hindalco down by 3.01%, Bharti Infratel down by 2.71%, JSW Steel down by 2.37%, Tata Steel down by 2.30% and UPL was down by 1.84% were the top losers.

Asian markets were trading mixed; Hang Seng decreased 12.74 points or 0.05% to 24,456.19, Jakarta Composite lost 253.96 points or 4.93% to 4,895.42, Shanghai Composite declined 0.81 points or 0.02% to 3,253.82 and Straits Times was down by 6.89 points or 0.28% to 2,492.44.

On the other hand; Taiwan Weighted strengthened 83.17 points or 0.66% to 12,691.75, Nikkei 225 surged 202.93 points or 0.88% to 23,235.47 and KOSPI was up by 20.67 points or 0.87% to 2,396.48.