Indices trade flat amid volatility in morning deals

Indian equity benchmarks erased initial gains and were now trading flat in morning deals, on the back of weak macroeconomic data. With the waning low base effect, India’s industrial production growth remained subdued for the third straight month and expanded by 1.4 per cent in November. The IIP had contracted by 1.6 per cent in November 2020.  Besides, with rising prices of essential kitchen items, the India’s retail inflation jumped to a six-month high of 5.59 per cent in December 2021, close to the Reserve Bank of India’s (RBI’s) upper tolerance limit of 6 per cent. Traders also remain concerned as a private report revised downwards its India's growth forecast for the current financial year to 9.1 per cent from 9.5 per cent earlier, citing the massive surge in Omicron infections and the resultant impact on overall economic activities in the March quarter.

On the global front, Asian markets were trading mostly in red despite the positive cues overnight from Wall Street, as traders digested the latest US inflation data and remained concerned about the resurging coronavirus cases in the country. Back home, on the sectoral front, telecom stocks remained under watch after the communications ministry said telecom operators Vodafone Idea (VIL), Tata Teleservices and Tata Teleservices (Maharashtra) (TTML) will not become public sector undertakings after their interest payable on dues are converted into government equity.

The BSE Sensex is currently trading at 61115.51, down by 34.53 points or 0.06% after trading in a range of 60949.81 and 61348.57. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index fell 0.13%, while Small cap index was up by 0.08%.

The top gaining sectoral indices on the BSE were Metal up by 3.07%, Healthcare up by 1.25%, Basic Materials up by 1.05%, PSU up by 0.63% and Capital Goods up by 0.49%, while Realty down by 1.05%, Auto down by 0.58%, Consumer Durables down by 0.55%, Bankex down by 0.46% and IT down by 0.44% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 4.37%, Sun Pharma up by 3.93%, Power Grid Corporation up by 2.59%, Dr. Reddy's Lab up by 1.32% and NTPC up by 1.01%. On the flip side, Wipro down by 5.82%, HDFC Bank down by 1.45%, HCL Technologies down by 1.41%, Tech Mahindra down by 0.95% and Maruti Suzuki down by 0.91% were the top losers.

Meanwhile, rating agency ICRA has said it expects a miss in the disinvestment target to cause the government's fiscal deficit to print at Rs 16.6 lakh crore or 7.1 per cent of the GDP in current fiscal (FY22), overshooting the budgeted target. It stated with the state governments' fiscal deficit projected at a relatively modest 3.3 per cent of GDP in FY22, the general government fiscal deficit is estimated at around 10.4 per cent of the GDP. In the base case for FY23, it sees the government's fiscal deficit moderating to Rs 15.2 lakh crore or 5.8 per cent of GDP.

It said although the planned ceasing of GST compensation could cause the state governments' fiscal deficit to rise to the cap of 3.5 per cent of the GSDP set by the Fifteenth Finance Commission, the general government deficit will still compress to 9.3 per cent of the GDP in FY23.

ICRA's chief economist Aditi Nayar said that with a palpable buoyancy in tax collections, the government's gross tax receipts is expected to overshoot the budgeted amount by a healthy Rs 2.5 lakh crore in FY22. However, she said the net tax revenue gains to the government will be nullified by the expected large miss on receipts from disinvestment and back-ended spending, especially on those items that were included in the Second Supplementary Demand for Grants, such as food and fertiliser subsidies, equity infusion into Air India Assets Holding Limited, etc.

The CNX Nifty is currently trading at 18215.75, up by 3.40 points or 0.02% after trading in a range of 18163.80 and 18272.25. There were 29 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 4.60%, Sun Pharma up by 4.04%, JSW Steel up by 3.77%, Coal India up by 3.73% and Power Grid Corporation up by 2.59%. On the flip side, Wipro down by 5.93%, Tata Motors down by 1.78%, HCL Technologies down by 1.65%, HDFC Bank down by 1.39% and Tech Mahindra down by 1.20% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 257.12 points or 0.89% to 28,508.54, Shanghai Composite declined 14.60 points or 0.41% to 3,582.83, KOSPI fell 10.69 points or 0.36% to 2,961.79, Jakarta Composite lost 9.35 points or 0.14% to 6,637.72 and Straits Times trembled 1.65 points or 0.05% to 3,253.33.

On the flip side, Taiwan Weighted strengthened 28.76 points or 0.16% to 18,404.16 and Hang Seng increased 40.24 points or 0.16% to 24,442.41.