Sensex, Nifty erase losses; trade flat in morning deals

In a highly volatile session, Indian equity benchmarks recovered initial losses and were now trading flat in morning deals. Traders awaited more quarterly earnings reports from India Inc for cues. Traders took some support as the Ministry of Finance has released the balance of Rs 44,000 crore to the states and union territories (UTs) as a loan to compensate for the Goods and Services Tax (GST) shortfall, taking the total amount to Rs 1.59 lakh crore in 2021-22. This release of funds as back-to-back loans is in addition to the bi-monthly GST compensation being given out of cess collection. Market participants also took a note of SBI Research’s report stated that the Reserve Bank of India (RBI) should let the rupee rally against the dollar to contain imported inflation coming in mainly from crude prices and help push exports, as the current account risks from rising oil price can be contained at 1.4 per cent of GDP. On the global front, Asian markets were trading mixed, as traders reacted to disappointing earnings tech giants Apple and Amazon as well as policy announcements from the Bank of Canada and the Bank of Japan. Traders are also concerned that high inflation may force global central banks to tighten monetary policy earlier than thought.

The BSE Sensex is currently trading at 59973.81, down by 10.89 points or 0.02% after trading in a range of 59104.58 and 60034.28. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in mixed; the BSE Mid cap index rose 0.30%, while Small cap index was down by 0.14%.

The top gaining sectoral indices on the BSE were Metal up by 1.62%, Telecom up by 1.06%, Auto up by 0.87%, Basic Materials up by 0.84% and Realty up by 0.80%, while Energy down by 0.47%, Power down by 0.38% and Utilities down by 0.20% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.06%, Mahindra & Mahindra up by 1.64%, HCL Technologies up by 1.40%, SBI up by 1.32% and Bharti Airtel up by 1.29%. On the flip side, Kotak Mahindra Bank down by 1.65%, HDFC down by 1.58%, NTPC down by 1.16%, Reliance Industries down by 0.78% and Indusind Bank down by 0.69% were the top losers.

Meanwhile, the Ministry of Finance has released the balance of Rs 44,000 crore to the states and union territories (UTs) as a loan to compensate for the Goods and Services Tax (GST) shortfall, taking the total amount to Rs 1.59 lakh crore in 2021-22. This release of funds as back-to-back loans is in addition to the bi-monthly GST compensation being given out of cess collection.

This amount of Rs 1.59 lakh crore is over and above the compensation, more than Rs 1 lakh crore (based on cess collection), that is estimated to be released to states/union territories with the legislature during this financial year.  The total of Rs 2.59 lakh crore is expected to exceed the amount of GST compensation accruing in FY 2021-22. The Rs 44,000 crore being released now is funded from the Government of India securities issued in the current financial year, at a Weighted Average Yield of 5.69 percent. No additional market borrowing by the central government is envisaged on account of this release.

It is expected that this release will help the States/UTs in planning their public expenditure among other things, for improving, health infrastructure and taking up infrastructure projects. The ministry had on July 15 and October 7 released Rs 75,000 crore and Rs 40,000 crore, respectively, to the states.

The CNX Nifty is currently trading at 17864.85, up by 7.60 points or 0.04% after trading in a range of 17613.10 and 17882.25. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 2.02%, Adani Ports &SEZ up by 2.01%, JSW Steel up by 1.73%, HCL Technologies up by 1.56% and Mahindra & Mahindra up by 1.54%. On the flip side, Kotak Mahindra Bank down by 1.71%, HDFC down by 1.64%, Eicher Motors down by 1.10%, NTPC down by 1.06% and Indusind Bank down by 0.77% were the top losers.

Asian markets were trading mixed; Jakarta Composite soared 50.59 points or 0.78% to 6,574.67, Straits Times advanced 21.29 points or 0.66% to 3,225.11, Nikkei 225 surged 10.13 points or 0.04% to 28,830.22 and Shanghai Composite gained 5.52 points or 0.16% to 3,523.94. On the flip side, KOSPI fell 27.18 points or 0.9% to 2,982.37, Taiwan Weighted dropped 46.59 points or 0.27% to 16,995.04 and Hang Seng decreased 114.31 points or 0.45% to 25,441.42.