Markets trade under pressure in early deals amid hawkish Fed stance

Indian equity benchmarks made cautious start on Thursday ahead of the weekly F&O expiry later in the day and tracking hawkish rate pause by the US Fed announced overnight. Markets are trading under pressure with marginal cut in early deals as continued selling at TECK and IT counters dampened sentiments. Some concern came in with a private report stating that the sowing of kharif crops such as paddy, pulses and oilseeds is likely to be delayed with the sluggish progress of monsoon following a late onset over the Kerala coast on June 8. There was some cautiousness as domestic rating agency Crisil said the growth in aggregate GST collection for states is likely to moderate to 12-14 per cent in FY24 from 20 per cent in FY23. However, according to the provisional data available on the NSE, foreign institutional investors (FII) purchased shares worth a net Rs 1,714.72 crore on June 14. 

On the global front, most of the Asian markets are trading higher following the mostly positive cues from global markets overnight, as traders react positively to the US Fed pausing its interest rate hikes following ten consecutive rate hikes, while also forecasting additional increases before the end of the year. Traders also expect the Bank of Japan to maintain its ultra-loose policy when it meets on Friday.

Back home, IT stocks are trading under pressure as a private report reiterated its negative stance on Indian information technology (IT) services and downgraded the sector to underweight, as it believes the overall demand environment for the sector still remains weak. Among stocks, it has placed Infosys, TCS, MphasiS in its negative catalyst watch. In stock specific development, SJVN rose after the company signed a MoU with the Maharashtra State Power Generation Company for the development of 5,000 MW of renewable energy projects in the state.

The BSE Sensex is currently trading at 63113.16, down by 115.35 points or 0.18% after trading in a range of 63068.36 and 63219.54. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.33%, while Small cap index was up by 0.40%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.05%, FMCG up by 0.48%, Consumer Durables up by 0.39%, Auto up by 0.38% and Utilities up by 0.25%, while TECK down by 0.59%, IT down by 0.52%, Metal down by 0.42%, Bankex down by 0.23% and PSU down by 0.19% were the top losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 0.86%, Nestle up by 0.74%, HCL Technologies up by 0.69%, Asian Paints up by 0.59% and Sun Pharma up by 0.58%. On the flip side, Indusind Bank down by 1.60%, Infosys down by 1.25%, TCS down by 0.98%, Power Grid down by 0.79% and NTPC down by 0.72% were the top losers.

Meanwhile, domestic rating agency Crisil said the growth in aggregate GST collection for states is likely to moderate to 12-14 per cent in FY24 from 20 per cent in FY23. The agency’s senior director Anuj Sethi said despite the moderation in growth, the GST collections will continue to be the biggest driver of revenue growth for states. He added factors like the resilience of the Indian economy amid global turbulence, moderating inflationary environment, and increasing tax compliance will help the GST collections. The rating agency said 18 states that account for 90 per cent of aggregate gross state domestic product may see steady revenue growth at 6-8 per cent to a cumulative Rs 34 lakh crore this fiscal against a 7.3 per cent growth in FY23.

It noted that with the withdrawal of GST compensation support and muted sales tax collections and grants, growth this year will be predominantly supported by Goods and Services Tax (GST) collections, devolutions from the Centre and taxes and duties on liquor sales, together comprising 55-60 per cent of aggregate state revenues. It said growth in the central tax devolutions pool will moderate to 10 per cent from 13 per cent in the last fiscal, and added that this will be among the main driver of revenues for states. It said ‘while the proportion (of central tax devolution) is determined by the Finance Commission, the overall kitty is linked with gross tax collections by the Centre’.

It said excise duty and sales tax from liquor sales will also grow healthy at 10-12 per cent, led by increasing consumption as most states have kept their tax structure unchanged. States’ revenue from sales tax on motor fuel may increase only by a modest 6-8 per cent driven primarily by steady demand for petroleum products, with only a handful of states having announced revisions in their tax structures for motor fuel in their budgets for FY24. The agency also said a volatile global economic outlook and its impact on export-linked sectors could negatively impact the revenue projections, while better-than-expected tax buoyancy, any extension in the GST compensation period, or support from the Centre in the form of higher grants could augment states’ collections.

The CNX Nifty is currently trading at 18742.00, down by 13.90 points or 0.07% after trading in a range of 18721.75 and 18778.10. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Divi's Lab up by 2.67%, Adani Enterprises up by 1.83%, Apollo Hospital up by 1.62%, Britannia Industries up by 1.13% and Cipla up by 0.95%. On the flip side, Indusind Bank down by 1.54%, HDFC Life Insurance down by 1.25%, Infosys down by 1.11%, ONGC down by 1.01% and Hindalco down by 0.96% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 surged 241.58 points or 0.72% to 33,744.00, Hang Seng advanced 164.87 points or 0.85% to 19,573.29, Taiwan Weighted added 76.99 points or 0.45% to 17,315.13, Straits Times rose 16.81 points or 0.52% to 3,234.95 and Shanghai Composite was up by 2.79 points or 0.09% to 3,231.78. On the other hand, Jakarta Composite fell 22.03 points or 0.33% to 6,677.69 and KOSPI was down by 6.99 points or 0.27% to 2,612.09.