Indices pare some gains in afternoon session

Markets trim some of their initial gain as traders opted to book some profit at higher levels. However, bourses managed to trade above half a percent each as traders were seen taking support with Finance Minister Nirmala Sitharaman’s statement that the fiscal measures taken by government during 2020-21 have been calibrated to sustain high spending in the economy and assist in its V-shaped recovery, resulting in a positive GDP growth of 0.4 percent in third quarter of FY 2020-21. Traders were taking note of Chief Economist of the IMF Gita Gopinath’s statement that India has been at the forefront in fighting the coronavirus pandemic and ‘really stands out’ in terms of its vaccine policy. On the global front, Asian markets were trading amid central bank comments aimed at soothing fears about rising bond yields and inflation.

Back on street, buying in frontline stocks such as Kotak Mahindra, ICICI Bank and HDFC Bank were aiding sentiment, while selling in Power Grid, ONGC and NTPC kept the gains in the markets in check. In scrip specific developments, Dixon gained after fixing March 19 as record date for 1:5 stock split while BPCL declined after BPCL Trust offloads up to 7% stake in firm.

The BSE Sensex is currently trading at 50801.61, up by 360.54 points or 0.71% after trading in a range of 50702.36 and 50994.60. 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 0.01%, while Small cap index was up by 0.33%.

The top gaining sectoral indices on the BSE were Bankex up by 2.26%, Consumer Durables up by 1.08%, Basic Materials up by 0.59%, Consumer Discretionary up by 0.46% and Metal was up by 0.15%, while Oil & Gas down by 2.04%, Utilities down by 1.43%, Energy down by 1.05%, PSU down by 0.92% and Power was down by 0.89% were the top losing indices on BSE.

The top gainers on the Sensex were Kotak Mahindra Bank up by 3.66%, ICICI Bank up by 2.90%, HDFC Bank up by 2.62%, HDFC up by 2.02% and Bajaj Finserv was up by 1.89%. On the flip side, Power Grid down by 2.00%, ONGC down by 1.65%, NTPC down by 1.13%, Infosys down by 1.10% and Dr. Reddys Lab was down by 0.77% were the top losers.

Meanwhile, 15th Finance Commission Chairman NK Singh has called for setting up a Fiscal Council like institution to better manage the debt trajectory of the Centre and states. He also highlighted the ‘substantial’ increase in the proportion of cess and surcharge in Gross Tax Revenue (GTR) in the past 10 years, saying only if a Constitutional amendment is introduced to include a portion of it into the divisible pool, then states' could get a share of the revenue earned under that head.

Talking about the fiscal challenges, Singh said apart from the issue of consolidated roadmap or debt trajectory, two other issues continue to be dominant in the fiscal space. He said ‘these are lack of a fiscal institution in India by way of Fiscal Council or any other institution. Fact that we are one of those countries which have some kind of fiscal architecture, but does not have independent fiscal institutions is a factor that needs to be kept in mind.’ He noted that the second issue is since the world in general, investors and rating agencies focus not only on the debt trajectory of the central government but of the general government (centre and states together), there is a need for an institutional framework, which will cover both these as partners.

On the issue of cess and surcharge, he said the proportion of cess and surcharge in 2010-11 was 10.4 per cent of GTR. It increased to 19.9 per cent in BE of 2020-21. He said if we take out the 3 percentage points of GST compensation cess, then 10.4 per cent has gone up substantially to 16.5 per cent.’ He also said that it should not be the situation that the finance commission raises the devolution to the states and then the Centre increases cess and surcharge, thereby neutralising the impact of higher devolution. He added that cess and surchage do not form part of the divisible pool of tax revenue that goes to the states.

The CNX Nifty is currently trading at 15041.00, up by 84.80 points or 0.57% after trading in a range of 15035.45 and 15119.30. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were SBI Life Insurance up by 5.21%, Kotak Mahindra Bank up by 3.45%, Grasim Industries up by 3.31%, ICICI Bank up by 2.74% and HDFC Bank was up by 2.32%. On the flip side, BPCL down by 5.10%, GAIL India down by 2.76%, Indian Oil down by 2.46%, Power Grid down by 1.89% and ONGC was down by 1.61% were the top losers.

Asian markets were trading mixed; Taiwan Weighted dropped 32.98 points or 0.21% to 15,853.09, KOSPI fell 19.99 points or 0.67% to 2,976.12, Jakarta Composite lost 8.85 points or 0.14% to 6,239.62 and Shanghai Composite was down by 35.99 points or 1.05% to 3,385.42.

On the flip side, Straits Times advanced 31.32 points or 1.02% to 3,102.48, Nikkei 225 surged 284.69 points or 0.99% to 29,027.94 and Hang Seng was up by 228.43 points or 0.80% to 28,769.26.