Domestic indices trade higher in early deals after negative start

Indian equity benchmarks made negative start on Thursday tracking weakness in global peers. But, soon markets wipe out all losses and turned positive. Markets are trading higher with notable gains in early deals on the back of heavy buying in Telecom, Energy and Metal stocks. Early cautiousness was on account of Fitch’s statement that India’s medium-term growth outlook will assume a more critical role in sovereign assessment due to higher deficits and a slower consolidation path. Also, India recorded 12,760 fresh Covid-19 cases of the coronavirus disease (Covid-19). Though, some respite came in as SBI Research revised its contraction forecast for the current fiscal year to 7 per cent. The agency had earlier forecast a 7.4 per cent contraction in 2020-21 GDP numbers. Traders also took note of industry body CII’s statement that steps taken by the government is helping the country's exports to record positive growth and the trend is expected to continue.

On the global front, Asian markets were trading mixed in thin holiday trading on Thursday following the mixed cues from Wall Street after a US Labor Department report showed tame consumer price inflation in January and as Federal Reserve Chair Jerome Powell said that the US is still ‘very far’ from a strong labor market. Some of the regional bourses are closed on Thursday for the Lunar New Year, including South Korea, Taiwan and China. Japan is also shuttered in observance of National Foundation Day.

Back home, aviation industry stocks were in focus as Civil Aviation Minister Hardeep Singh Puri said international passenger traffic fell by 90.56 per cent to 18.55 lakh in March-December period of 2020 due to the COVID-19 pandemic as compared to the corresponding period of 2019. In scrip specific development, National Fertilizers gained amid report that the government will sell 20% of its stake in National Fertilizers through an offer for sale and has invited bids from merchant bankers for managing the share sale.

The BSE Sensex is currently trading at 51441.44, up by 132.05 points or 0.26% after trading in a range of 51157.31 and 51444.91. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.40%, while Small cap index was up by 0.69%.

The top gaining sectoral indices on the BSE were Telecom up by 1.56%, Energy up by 1.35%, Metal up by 0.95%, Basic Materials up by 0.80%, Oil & Gas up by 0.59%, while Consumer Durables down by 0.64%, Auto down by 0.46%, IT down by 0.19%, Consumer discretionary down by 0.12%, Power down by 0.12% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 1.66%, Reliance Industries up by 1.56%, Axis Bank up by 1.12%, Bajaj Finserv up by 1.10% and Bajaj Finance up by 1.06%. On the flip side, NTPC down by 2.40%, Titan Company down by 2.26%, ONGC down by 0.65%, HDFC down by 0.61% and Infosys down by 0.44% were the top losers.

Meanwhile, Fitch Ratings has said that India's high fiscal deficit would pose a challenge in lowering the debt to GDP ratio, which is expected to rise above 90 per cent in the next five years. It said the country entered the coronavirus disease (covid-19) pandemic with little fiscal headroom from a rating perspective. Its general government debt/GDP ratio stood at 72 percent in 2019, against a median of 42 percent for 'BBB' rated peers.

Fitch further said the budget points to a loosening of fiscal policy to support the country's ongoing economic recovery from the pandemic and will consequently lead to a rise in public debt. It noted that the debt/GDP trajectory is core to its sovereign rating assessment, meaning higher deficits and a slower consolidation path will make India's medium-term growth outlook take on a more critical role in its analysis.

It said ‘the budget's deficit projections for the fiscal years ending March 2022 (FY22) to FY26 are about 1pp (percentage point) a year above our previous estimates between, which could make it more challenging to put debt/GDP on a downward trajectory’. India has exceeded its fiscal deficit target of 3.5 percent in the current fiscal by a wide margin due to higher spending to stimulate the economy amid the pandemic.

The CNX Nifty is currently trading at 15137.20, up by 30.70 points or 0.20% after trading in a range of 15065.40 and 15151.10. There were 29 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 4.24%, Reliance Industries up by 1.73%, Bharti Airtel up by 1.47%, GAIL India up by 1.46% and Bajaj Finance up by 1.18%. On the flip side, Eicher Motors down by 3.93%, NTPC down by 2.75%, Titan Company down by 2.35%, Hero MotoCorp down by 1.26% and Divis Lab down by 0.70% were the top losers.

Asian markets were trading mixed; Hang Seng surged 112.79 points or 0.38% to 30,151.51 and Jakarta Composite added 3.14 points or 0.05% to 6,204.97. On other hand, Straits Times fell 6.35 points or 0.22% to 2,919.49.