Benchmark equity indices lost further ground as Finance Minister Chidambaram’s fiscal consolidation roadmap emerged no bolt of the blue, tempering enthusiasm seen on account of big Cabinet reshuffle. The FM stated that Government has accepted recommendations of the Kelkar Committee on fiscal consolidation and the fiscal deficit would be 5.3% in 2012-13, higher than the budgeted fiscal deficit for the current fiscal at 5.1 percent of GDP.
Meanwhile, in the biggest reshuffle of the Congress-led United Progressive Alliance Cabinet, Manmohan Singh inducted 17 new faces and a total of 22 ministers giving several new and young faces a chance to prove their mettle as his government try to remove the taint of scams and non-performance from its progress report. The biggest beneficiary of the rejig are the stocks of market bellwether Reliance Industries, which have scooped up gains on hopes of improved relationship with the government after the appointment of Veerappa Moily as the new Petroleum and Natural Gas Minister on Sunday.
The 30 share barometer index, Sensex, on Bombay Stock Exchange, despite trading up with gains of over 50 points, is oscillating sub 18700 mark, while 50 share index, Nifty, trading higher over quarter percentage is hovering above the psychological 5650 mark. Additionally, broader indices too have trimmed some of their gains.
On the global front, Asian shares slipped on Monday as investors switched their focus away from signs of stable U.S. growth, looking instead at tepid global corporate earnings and the uncertain economic outlook.
Closer home, the BSE Sensex is currently trading at 18672.74, up by 47.40 points or 0.25% after trading in a range of 18743.41 and 18651.35. There were 17 stocks advancing against 13 declines on the index. The overall market breadth on BSE is in the favour of advances which thumped declines in the ratio of 1319:1118, while 153 shares remained unchanged.
The broader indices too have timed some gains; the BSE Mid cap and Small cap indices were trading higher by 0.21% and 0.37% respectively.
The top gainers on the BSE sectoral space were, Oil & Gas up by 1.06%, Consumer Durable up by 0.71%, Auto up by 0.56%, Realty up by 0.52%, and Health Care up by 0.49%. While, Capital Goods down by 0.52%, IT down by 0.13%, TECk and Power down by 0.05% were the top losers on the sectoral space.
The top gainers on the Sensex were Wipro up by 2.41%, Hero MotoCorp up by 2.24%, RIL up by 1.85%, Mahindra & Mahindra up by 1.69% and Hindalco up by 1.55%. On the other hand, BHEL down by 3.24%, Sterlite Industries down by 1.59%, Hindustan Unilever down by 0.98%, Maruti Suzuki down by 0.71%, Coal India down by 0.65% were the top losers on the Sensex.
Meanwhile, justifying the stance of diesel price hike along with introduction of other reforms, Prime Minister’s Economic Advisory panel said that reining fiscal deficit is a key to sustain high growth in the medium term. PMEAC’s Chairman C Rangarajan underscored that the process of fiscal consolidation was important from the point of view of sustaining high growth over the medium term and that there was immense need of clear programme for containing subsidies. Additionally, he recommended that the government should rationalize the subsidies with a view of preventing wastage and helping needy.
Further, explaining the roadmap for doing so, the chairman said that, “Priorities would have to be laid down by the government in terms of the type of subsidy which is considered to be most important and then accordingly the less important one’s should be trimmed in order to ensure that overall subsidy is within the limits of what is considered to be prudent”.
Moreover, the chairman highlighted the need of loan term plan to bring down the subsidies in proportion of GDP, besides, pointing the requirement of ensuring higher tax-GDP ratio. C Rangarajan, further added that the process of fiscal consolidation should be such as to ensure that over the next 2-3 years, the Indian economy could get back to the fiscal deficit of 3 percent of GDP.
Indian economy, which has been battling worries of high fiscal deficit and declining growth momentum, has the budgeted fiscal deficit for the current fiscal at 5.1 percent of GDP. However, the qualms are that that higher subsidy outgo and lower buoyancy in revenue realization could push the figure higher than 6 percent. Yet, the Finance Ministry believes that the recent reforms initiatives would help limit the fiscal deficit at 5.3 percent in the current fiscal.
Chidambaram, after taking charge of the Finance Ministry in August, has undertaken a aggressive reform drive boost investment flow. Besides, diesel prices hike by over Rs 5 a litre, foreign investment norms were relaxed for retail, insurance, pension, information and broadcasting sectors.
The S&P CNX Nifty is currently trading at 5,677.10, up by 12.80 points or 0.23% after trading in a range of 5,698.30 and 5,663.65. There were 31 stocks advancing against 19 declines on the index.
The top gainers of the Nifty were Wipro up by 2.47%, Hero Moto Co up by 2.16%, Reliance Industries up by 1.90%, M&M up by 1.69% and Hindalco up by 1.60%. While, BHEL down by 2.64%, HUL down by 1.11%, BPCL and Bank of Baroda were down by 0.96% and Tata Motors down by 0.75% were top losers on the index
Asian equity indices were trading mostly in the red; Taiwan Weighted lost 0.59%, Shanghai Composite declined by 0.50%, Jakarta Composite shed 0.34%, Straits Times plunged 0.70% and Hang Seng slid 0.25% while Nikkei 225 edged lower by 0.04% and KLSE Composite too was trading lower by 0.03%, while Kospi Composite solely was trading flat with positive bias.
