Markets remain subdued in noon trade

Mirroring other Asian markets, Indian equity benchmarks continue to trade in red terrain in noon deals as investors booked profits at higher levels. Concerns over US default, a sharp fall in US stocks overnight and worries over the slowing global economy hit the domestic sentiments. Trade sentiment remained cautious with rating agency Crisil’s statement that States' indebtedness will remain high this fiscal at 33 per cent, which is only a notch below the record high of 34 per cent of their gross domestic products in FY21, as tax buoyancy will be offset by higher revenue expenditure and capital outlays. On the global front, Asian markets were trading mixed as worries about economic growth in China combined with fears of a global slowdown.

Back home, Aditya Birla Sun Life AMC IPO subscribed 53% in 70 minutes of bidding. The AMC had allotted 1,10,80,800 shares to anchor investors at Rs 712 apiece, valuing the aggregate transaction at Rs 788.95. On sectoral front, stocks from Bankex, IT and TECK counters were trading lower, while Utilities, Power and Realty counters were supporting the markets.

The BSE Sensex is currently trading at 59298.20, down by 369.40 points or 0.62% after trading in a range of 59111.41 and 59419.01. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.56%, while Small cap index was up by 0.23%.

The top gaining sectoral indices on the BSE were Utilities up by 3.28%, Power up by 3.06%, Realty up by 2.62%, PSU up by 2.34% and Metal was up by 1.21%, while Bankex down by 0.72%, IT down by 0.51%, TECK down by 0.44%, Auto down by 0.41% and FMCG was down by 0.34% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 5.27%, Power Grid up by 3.18%, Sun Pharma up by 2.19%, SBI up by 1.63% and Dr. Reddy's Lab was up by 1.18%. On the flip side, Ultratech Cement down by 1.74%, Kotak Mahindra Bank down by 1.62%, Tech Mahindra down by 1.62%, HDFC down by 1.58% and Asian Paints was down by 1.45% were the top losers.

Meanwhile, Rating agency Crisil in its latest report has said that states' indebtedness will remain high this fiscal at 33 per cent, which is only a notch below the record high of 34 per cent of their gross domestic products (GDP) in FY21, as tax buoyancy will be offset by higher revenue expenditure and capital outlays. It said stated differently, overall debt of the states, including guarantees, is likely to increase by Rs 7.2 lakh crore this fiscal to Rs 71.4 lakh crore, which is 33 per cent of their combined GSDP. It added that this math will not hold if there is a third wave or if the revenue does not clip at least 15 per cent.

According to the report, the debt-to-GSDP ratio had risen to a decadal high of 34 per cent last fiscal after the first wave caught everyone by complete surprise. And that the sticky and elevated revenue expenditure and the need for higher capital outlay will keep borrowings up this fiscal. However, it said GST compensation of Rs 1.4 lakh crore as against Rs 0.9 lakh crore last year will provide some respite, which is based on the data of the top 18 states, which account for 90 per cent of the aggregate GSDP.

The report further stated that as the economy recovers, two major components of revenue -- GST and sales tax on petroleum products and liquor that comprises 30 per cent of total tax mop-up -- is likely to rebound strongly. It noted that GST could grow 20 per cent supported by higher inflation and better compliance levels, while the sales tax is seen clipping at 25 per cent, given the volume recovery and higher crude prices. However, it said revenue expenditure is likely to jump 10-11 per cent, negating the tax gains. As much as 75-80 per cent of the revenue expenditure of the states go towards salaries, pensions, interest costs, and essential developmental expenditure like grants-in-aid, medical and labour welfare-related expenses.

The CNX Nifty is currently trading at 17655.35, down by 93.25 points or 0.53% after trading in a range of 17608.15 and 17689.30. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Coal India up by 8.22%, NTPC up by 5.31%, Indian Oil Corporation up by 3.38%, Power Grid up by 3.29% and Sun Pharma was up by 3.08%. On the flip side, Kotak Mahindra Bank down by 1.93%, Ultratech Cement down by 1.73%, HDFC down by 1.71%, Tech Mahindra down by 1.47% and Asian Paints was down by 1.43% were the top losers.

Asian markets were trading mixed; Nikkei 225 slipped 639.67 points or 2.12% to 29,544.29, KOSPI fell 37.65 points or 1.22% to 3,060.27, Taiwan Weighted dropped 325.98 points or 1.9% to 16,855.46, Shanghai Composite declined 58.88 points or 1.63% to 3,543.34

On the flip side; Jakarta Composite soared 21.75 points or 0.36% to 6,134.86, Straits Times advanced 2.04 points or 0.07% to 3,079.73 and Hang Seng was up by 119.70 points or 0.49% to 24,620.09.