Key indices trade flat in lacklustre trade

Indian equity benchmarks were trading flat with positive bias in morning deals ahead of the expiry of monthly derivatives amid a largely weak trend in Asian markets. Traders took a note of report that the shortfall in GST compensation payable to states in the current fiscal is estimated at Rs 2.69 lakh crore, of which Rs 1.58 lakh crore would have to be borrowed this year. The Centre expects to collect over Rs 1.11 lakh crore through cess on luxury, demerit and sin goods which will be given to the states to compensate them for the shortfall in revenue arising out of GST implementation. Besides, amid the second wave of COVID-19 pandemic, CII President Uday Kotak has ‘strongly’ recommended the government to consider another fiscal package to support the lower end of the society as well as small and medium businesses. Meanwhile, the Income Tax Department has issued Rs 25,301 crore-worth refunds to more than 15.45 lakh taxpayers so far this fiscal. Globally, Asian markets were trading mostly in red on fears central banks were closer to considering winding back their emergency stimulus while the dollar held at a one-week top. 

The BSE Sensex is currently trading at 51025.86, up by 8.34 points or 0.02% after trading in a range of 50917.59 and 51128.80. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.10%, while Small cap index was up by 0.34%.

The top gaining sectoral indices on the BSE were IT up by 1.06%, TECK up by 0.91%, Auto up by 0.89%, Energy up by 0.63% and Oil & Gas up by 0.52%, while Realty down by 0.61%, Bankex down by 0.35%, Healthcare down by 0.30% and Telecom down by 0.03% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 1.45%, TCS up by 1.39%, Infosys up by 0.83%, ITC up by 0.74% and Ultratech Cement up by 0.71%. On the flip side, Bajaj Finance down by 1.28%, Bajaj Finserv down by 1.11%, Dr. Reddys Lab down by 0.86%, Hindustan Unilever down by 0.79% and HDFC Bank down by 0.77% were the top losers.

Meanwhile, rating agency Crisil in its research report has said that higher input prices and disruptions to the rural economy have resulted in price pressures and inflation is back to haunt us. It sees upside risks to its 5 percent estimate on consumer price inflation in FY21 because of this.  It can be noted that the RBI is required to maintain the crucial number at 4 percent in the medium term, with a 2 percentage point leeway on either side as part of its inflation target. It said a surge in inflation worries had led it to desist from introducing rate cuts during much of FY21, despite the over 7.6 percent contraction in the economy.

Crisil said data collection was disrupted in April and May 2020 because of the national lockdown, and last year's base will not reflect accurate trends. Therefore, it has focused on sequential price trends on a seasonally adjusted basis. When viewed thus, both WPI (wholesale price index) and CPI indices continued to increase on-month in April 2021. It also stated that input costs are rising because of a surge in global commodities, which are raising manufacturing costs and hence fanning domestic inflation, the report added.

The report further said WPI inflation has surged in double digits in April on-year for items directly linked to these commodities and added that crude-linked inflation has risen the sharpest, partly led by the base effect too. Producers are currently bearing a higher burden of rising input costs than consumers. However, it said as demand revives, these costs can get increasingly passed on to consumers.

The CNX Nifty is currently trading at 15309.85, up by 8.40 points or 0.05% after trading in a range of 15278.60 and 15335.55. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Wipro up by 1.96%, Tata Motors up by 1.92%, Hero MotoCorp up by 1.90%, Bajaj Auto up by 1.41% and TCS up by 1.34%. On the flip side, Bajaj Finance down by 1.27%, Bajaj Finserv down by 1.07%, Cipla down by 0.97%, Hindustan Unilever down by 0.86% and Dr. Reddys Lab down by 0.84% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 161.28 points or 0.56% to 28,480.91, Taiwan Weighted dropped 89.44 points or 0.54% to 16,554.25, KOSPI fell 6.77 points or 0.21% to 3,161.66 and Hang Seng decreased 76.29 points or 0.26% to 29,089.72.

On the flip side, Straits Times advanced 9.29 points or 0.3% to 3,155.38, Shanghai Composite gained 6.91 points or 0.19% to 3,600.27 and Jakarta Composite soared 72.36 points or 1.24% to 5,888.20.