Domestic indices trade firm in early deals

Indian equity benchmarks made positive start on Friday tracking gains in other Asian counterparts. Soon, markets added strength and are trading firm in early deals with gains of around 0.80% each. Buying in Telecom, Realty and Bankex aided the sentiments. Some support came in as India Ratings and Research (Ind-Ra) said that higher tax and non-tax revenue collections this fiscal are expected to more than offset the shortfall in disinvestment revenue, leading to the fiscal deficit coming in at 6.6 per cent of GDP in FY22, or 20 basis points lower than the budgeted target. Investors are eyeing the 46th meeting of the GST Council chaired by Union Finance Minister Nirmala Sitharaman, to be held later in the day. This meeting holds importance ahead of the Union Budget which is presented on the first day of February by the Finance Minister in Parliament.

On the global front, Asian markets are trading higher in thin trading session as most of the markets were closed on account of New Year holiday. With early indications that the Omicron variant causes milder symptoms, traders seem optimistic the new strain will not derail the economic recovery. Trading activity is also somewhat subdued as some traders looked to get a head start on New Year's festivities. Markets in Japan, Indonesia, South Korea and Taiwan are closed for holidays. Back home, textile industry stocks will be in focus as several states flagged higher tax rate on textile products from January 1 and demanded that the rate hike be put on hold, ahead of the GST Council meeting.  Besides, CMS Info Systems shares were scheduled to list on BSE and NSE today. It was subscribed 1.95 times from December 21-23, 2021.

The BSE Sensex is currently trading at 58263.44, up by 469.12 points or 0.81% after trading in a range of 57846.52 and 58286.97. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.77%, while Small cap index was up by 0.86%.

The top gaining sectoral indices on the BSE were Telecom up by 2.40%, Realty up by 1.63%, Bankex up by 1.60%, Metal up by 1.44%, Consumer Durables up by 1.39%, while IT down by 0.05% was the sole losing index on BSE.

The top gainers on the Sensex were Axis Bank up by 2.41%, Titan Company up by 2.22%, Kotak Mahindra Bank up by 2.07%, Bharti Airtel up by 1.85% and SBI up by 1.46%. On the flip side, NTPC down by 1.97%, Tech Mahindra down by 0.59%, Wipro down by 0.31%, Infosys down by 0.30% and Power Grid Corp down by 0.17% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has said that higher tax and non-tax revenue collections this fiscal are expected to more than offset the shortfall in disinvestment revenue, leading to the fiscal deficit coming in at 6.6 per cent of GDP in FY22, or 20 basis points lower than the budgeted target. As per the agency, the data relating to the Union government finances show that tax collections so far have immensely benefitted both from growth and inflation. While the GDP growth is benefitting due to the lower base of last year, higher inflation (GDP deflator) has led to the economy registering higher nominal GDP growth and thus helping higher tax collections.

As per the report, the gross tax revenue collection in FY22 is expected to be Rs 5.9 trillion higher than the budgeted figure, with the share of corporation tax being 28.4 per cent, income tax 16.3 per cent, GST 14.7 per cent, custom duty 14.2 per cent, excise duty 22.4 per cent and others 3.9 per cent. As a result, the share of direct tax in the expected additional gross tax revenue collection works out to be 44.7 per cent and that of indirect tax 55.3 per cent. On the whole, the share of direct taxes in the gross tax revenue of FY22 is expected to increase to 48.9 per cent in FY22 from 45.8 per cent in FY21. Like tax revenue, even the non-tax revenue is expected to come in higher than the budgeted figure in FY22. Non-tax revenue is forecast to reach Rs 3.1 trillion in FY22 as against the budgeted Rs 2.4 trillion.

However, capital receipts are lagging and, despite growing 20.3 per cent YoY during April-October 2021, were only 10.5 per cent of the FY22 budgeted amount. If the first seven months of FY22 is an indication, then once again the disinvestment target of Rs 1.75 trillion will be missed by a big margin. Till October 2021, the total disinvestment proceeds have been just Rs 93.64 billion, which is only 5.4 per cent of the target. On the expenditure front, the Union government has brought in two supplementary demands for grants -- one for Rs 236.75 billion and the other one for Rs 2.992.43 billion after the presentation of general budget on February 1, 2021. This will lead to total expenditure commitments of Rs 38.1 trillion in FY22.

The CNX Nifty is currently trading at 17347.70, up by 143.75 points or 0.84% after trading in a range of 17238.50 and 17351.45. There were 43 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 3.61%, Axis Bank up by 2.50%, Titan Company up by 2.18%, Kotak Mahindra Bank up by 1.94% and Bharti Airtel up by 1.81%. On the flip side, NTPC down by 1.85%, Tech Mahindra down by 0.39%, Infosys down by 0.27%, Wipro down by 0.25% and ONGC down by 0.25% were the top losers.

Asian markets are trading in green; Straits Times rose 3.42 points or 0.11% to 3,130.06, Hang Seng surged 302.11 points or 1.31% to 23,414.12 and Shanghai Composite was up by 12.95 points or 0.36% to 3,632.14.