Benchmarks trade lower with marginal cut in early deals

Indian equity benchmarks made pessimistic start on Thursday amid lackluster global cues. Markets are trading lower with marginal cut in early deals due to selling in Bankex, Consumer Durables and Telecom stocks. However, broader indices -- BSE Mid and small cap are performed larger peers with notable gains. Traders were concerned as India recorded 12,703 fresh Covid-19 cases of the coronavirus disease (Covid-19). The country continues to be second-most-affected globally, and ranks 18th among worst-hit nations by active cases. Some cautiousness also crept in with rating agency Moody's statement that India's fiscal deficit projections are higher than expected and slower consolidation will constrain its fiscal strength over the medium term. It also expects India's nominal GDP growth to rise to closer to 17 percent in fiscal 2021, higher than 14.4 percent projected in the Budget. Meanwhile, investors are looking ahead to the Reserve Bank of India’s (RBI’s) monetary policy meeting outcome on Friday. The Monetary Policy Committee (MPC) of the Reserve Bank is widely expected to keep repo rates on hold at 4 percent.

On the global front, most of the Asian markets were trading lower after strong gains in the previous sessions and following the mixed cues overnight from Wall Street as the release of some upbeat economic data raised concerns of additional US stimulus. Investors also turned cautious as they digested local corporate earnings results. Back home, aviation stocks were in focus as global airlines body IATA said passenger traffic at airports in tier 2 and 3 cities of the country is higher than pre-COVID levels. In scrip specific development, Future Group stocks were under pressure after Sebi barred Kishore Biyani and certain other promoters of Future Retail from the securities market for one year for indulging in insider trading in the shares of the company.

The BSE Sensex is currently trading at 50142.44, down by 113.31 points or 0.23% after trading in a range of 49995.68 and 50250.17. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.72%, while Small cap index was up by 0.84%.

The top gaining sectoral indices on the BSE were Auto up by 1.84%, Power up by 1.71%, Oil & Gas up by 1.62%, Utilities up by 1.07%, Consumer discretionary up by 1.06%, while Bankex down by 1.19%, Consumer Durables down by 0.41%, Telecom down by 0.15%, TECK down by 0.02% were the top losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 5.11%, ONGC up by 4.18%, Maruti Suzuki up by 1.44%, Bajaj Auto up by 1.42% and ITC up by 1.29%. On the flip side, Indusind Bank down by 2.42%, Asian Paints down by 1.67%, HDFC Bank down by 1.53%, ICICI Bank down by 1.44% and Axis Bank down by 1.27% were the top losers.

Meanwhile, rating agency Moody's has said that India's fiscal deficit projections are higher than expected and slower consolidation will constrain its fiscal strength over the medium term. It expects India's nominal gross domestic product (GDP) growth to rise to closer to 17 percent in fiscal 2021, higher than 14.4 percent projected in the Budget.

The US-based agency has stated that the budget's focus on higher capital spending, financial sector reform and asset sales will help stimulate growth, but implementation risks remain and slower fiscal consolidation will constrain fiscal strength over the medium term. It noted that as per the glide path for fiscal consolidation announced in Budget, the government plans to bring down the fiscal deficit to 4.5 per cent of GDP by 2025-26 fiscal.

Moody's said greater transparency on off-balance-sheet food subsidy expenditure and more conservative revenue assumptions have contributed to the government's higher deficit number for fiscal 2020. India has budgeted a fiscal deficit of 9.5 per cent of GDP for the current fiscal ending March. It also said the financial sector will undergo some credit positive reform under the new budget. Banks will benefit from the establishment of an asset reconstruction company to resolve legacy problem loans, and public sector banks additionally from a Rs 20,000 crore capital infusion.

The CNX Nifty is currently trading at 14771.80, down by 18.15 points or 0.12% after trading in a range of 14723.25 and 14794.60. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 5.35%, ONGC up by 4.28%, Hero MotoCorp up by 3.20%, GAIL India up by 2.80% and Hindalco up by 1.98%. On the flip side, Indusind Bank down by 2.27%, HDFC Bank down by 1.54%, Asian Paints down by 1.54%, Tata Steel down by 1.44% and Axis Bank down by 1.32% were the top losers.

Asian markets were trading mostly in red; Nikkei lost 267.06 points or 0.93% to 28,379.44, Straits Times declined 25.50 points or 0.87% to 2,901.97, Hang Seng plunged 446.10 points or 1.52% to 28,861.36, Taiwan Weighted fell 91.67 points or 0.58% to 15,679.65, KOSPI slipped 53.97 points or 1.72% to 3,075.71 and Shanghai Composite was down by 35.86 points or 1.02% to 3,481.45, while Jakarta Composite gained 27.79 points or 0.46% to 6,105.54.