Key indices trade flat with positive bias in morning deals

Altering between gains and losses, Indian equity benchmarks were now trading flat with positive bias in morning deals, led by gains in Metal, FMCG and Realty stocks. Traders got some support with ICRA Ratings’ report stated that most states are likely to be in better fiscal health this financial year as 20 of them are collectively carrying forward Rs 2.6 lakh crore borrowed in FY21 to this fiscal. It said this also explains why the states have been borrowing less so far this year despite the pandemic-driven revenue crunch and the soaring public expenses towards health and food. Some support also came as RBI data showed country's foreign exchange reserves increased by $889 million to a lifetime high of $621.464 billion in the week ended August 6, 2021. However, gains remain capped with private report stating that deal activity in India during the first half of 2021 amounted to $40.7 billion across 710 deals, including both private equity (PE) and strategic acquisitions (M&A).

Asian markets are trading mostly in red, after a raft of Chinese data showed a surprisingly sharp slowdown in the engine of global growth, just as much of the world races to stem the spread of the Delta variant of COVID-19 with vaccinations. Figures on July retail sales, industrial production and urban investment all missed forecasts, a trend that is only likely to get worse given the recent tightening in coronavirus restrictions there. Back home, on the sectoral front, textile industry’s stocks remained in watch as the government notified the RoSCTL scheme for textiles exporters and said the duty credit scrips under this support measure would be issued without insisting on realisation of the export proceeds.

The BSE Sensex is currently trading at 55498.88, up by 61.59 points or 0.11% after trading in a range of 55281.02 and 55543.66. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.15%, while Small cap index was down by 0.42%.

The top gaining sectoral indices on the BSE were Metal up by 0.78%, FMCG up by 0.34%, Realty up by 0.19%, Oil & Gas up by 0.08% and IT up by 0.07%, while Capital Goods down by 0.67%, Power down by 0.63%, Consumer Durables down by 0.57%, Auto down by 0.41% and Consumer Discretionary down by 0.38% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.16%, Mahindra & Mahindra up by 1.56%, Bajaj Finserv up by 1.48%, Bajaj Finance up by 1.35% and Nestle up by 1.03%. On the flip side, Bajaj Auto down by 1.52%, Maruti Suzuki down by 1.02%, Power Grid Corporation down by 0.89%, Ultratech Cement down by 0.76% and Dr. Reddy's Lab down by 0.62% were the top losers.

Meanwhile, ICRA Ratings in its latest report has said that most states are likely to be in better fiscal health this financial year as 20 of them are collectively carrying forward Rs 2.6 lakh crore borrowed in FY21 to this fiscal. It said this also explains why the states have been borrowing less so far this year despite the pandemic-driven revenue crunch and the soaring public expenses towards health and food.

According to the report, given the pandemic and the resultant financial crunch, the Centre allowed states to borrow up to 5 per cent of their gross state domestic product (GSDP) -- resulting in an aggregate borrowing of Rs 8.5 lakh crore -- in FY21 as they faced massive drop in revenues and higher expenses towards supporting the people hit by the lockdowns. It also noted that as of August 10, when the state debt was auctioned last, the borrowings by the states so far in FY22 has been 11 per cent less year-on-year and 15 per cent lower than the amounts shown in the indicative auction calendar.

The report further said for the current fiscal, of the normal net borrowing ceiling of 4 per cent of GSDP set by the Centre for 28 states at Rs 8.5 trillion, 3.5 per cent of FY22 GSDP is unconditional and the rest 0.5 per cent (Rs 1.1 lakh crore) is contingent on them meeting incremental capital expenditure in FY22. It pointed out that the size of this unutilised borrowing in FY21 as a proportion of FY22 GSDP exceeds 0.5 per cent of GSDP for 15 states, reducing their likely dependence on the conditional borrowing of 0.5 per cent. It added that this will help these states that need to incur a larger revenue deficit in FY22 but are unable to step up their capital spending by the required magnitude of 0.5 per cent of GSDP.

The CNX Nifty is currently trading at 16537.15, up by 8.05 points or 0.05% after trading in a range of 16480.75 and 16550.75. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 2.14%, Mahindra & Mahindra up by 1.59%, Bajaj Finserv up by 1.39%, Bajaj Finance up by 1.25% and Nestle up by 1.04%. On the flip side, Bajaj Auto down by 1.51%, Divi's Lab down by 1.24%, Shree Cement down by 1.19%, Maruti Suzuki down by 1.06% and Power Grid Corporation down by 0.95% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 471.29 points or 1.68% to 27,505.86, Hang Seng decreased 196.21 points or 0.74% to 26,195.41, Taiwan Weighted dropped 111.35 points or 0.66% to 16,870.76, Jakarta Composite lost 62.85 points or 1.02% to 6,076.64 and Straits Times trembled 10.98 points or 0.35% to 3,154.51.

On the flip side, Shanghai Composite gained 12.84 points or 0.37% to 3,529.14.