Benchmarks trade flat in morning deals

Indian equity benchmarks erased most of their initial losses and were trading flat in morning deals amid weekly F&O expiry later in the day. Traders remained cautious as S&P Global Ratings reportedly said India is unlikely to embark on any major new reforms till the 2024 elections, but momentum could pick up if the next government comes with a strong mandate. However, losses got trimmed as traders took support with World Bank President Ajay Banga’s statement that amidst risk of a global slowdown in the early part of next year, India is expected to remain shielded from its effects due to robust domestic consumption. Traders also took a note of a private report that India’s chances of missing the budget deficit target for this fiscal year is very slim at the moment despite weather hindrances, divestment revenue risks and meek corporate tax collections, thanks to support from the central bank. On the global front, Asian markets are trading mostly in red as traders remain cautiously optimistic because of an improving outlook for interest rates.

The BSE Sensex is currently trading at 67061.11, down by 36.33 points or 0.05% after trading in a range of 66831.38 and 67129.39. There were 8 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.15%, while Small cap index was up by 0.42%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.89%, Energy up by 0.66%, Oil & Gas up by 0.64%, PSU up by 0.59% and FMCG up by 0.45%, while IT down by 0.91%, TECK down by 0.80%, Consumer Durables down by 0.31%, Auto down by 0.28% and Capital Goods down by 0.20% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 1.23%, SBI up by 0.86%, ITC up by 0.82%, Indusind Bank up by 0.75% and Tata Steel up by 0.34%. On the flip side, Infosys down by 1.59%, Ultratech Cement down by 1.50%, HCL Technologies down by 1.47% and TCS down by 0.75% were the top losers.

Meanwhile, S&P Global Ratings Director Andrew Wood has said that reform momentum in India is likely to pick up only after the Lok Sabha elections next year and a little bit of boost to the expenditure in an election year would not adversely impact India's fiscal deficit target.  Wood stated ‘Our expectation is major reforms in the country are probably unlikely right up to the election cycle and until 2024 Parliamentary elections are over. After that perhaps, reform momentum could pick up, particularly if there is a very strong mandate for the next government.’

S&P anticipates that the central government will meet its modestly lower fiscal deficit target and also state governments will be consolidating their finances gradually overtime. Wood said ‘Even if we see a little bit of boost to the expenditure in an election year, in the run up to the elections, revenue growth also remains healthy in India and that has been supporting the gradual pace of fiscal consolidation.’

The fiscal deficit, which is the difference between government expenditure and revenue, narrowed to 6.4 per cent of GDP in the 2022-23 fiscal, from 6.7 per cent of GDP in the 2021-22 fiscal. In the current fiscal, the deficit is budgeted at 5.9 per cent of GDP. As per the fiscal consolidation roadmap, the government intends to bring down the fiscal deficit below 4.5 per cent of GDP by 2025-26.

The CNX Nifty is currently trading at 19829.85, down by 3.30 points or 0.02% after trading in a range of 19758.40 and 19847.70. There were 19 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Dr. Reddy's Lab up by 2.35%, Sun Pharma up by 1.22%, SBI up by 0.79%, Indusind Bank up by 0.79% and ITC up by 0.74%. On the flip side, Infosys down by 1.69%, Ultratech Cement down by 1.50%, HCL Technologies down by 1.47% and Hero MotoCorp down by 1.05% were the top losers. 

Asian markets are trading mostly in red; Shanghai Composite weakened 10.4 points or 0.33% to 3,188.44, KOSPI dropped 4.95 points or 0.19% to 2,603.29, Straits Times fell 3.8 points or 0.12% to 3,271.44 and Nikkei 225 slipped 383.83 points or 1.17% to 32,512.20.

On the flip side, Jakarta Composite gained 26.95 points or 0.39% to 6,857.15, Taiwan Weighted added 31.33 points or 0.18% to 17,147.77 and Hang Seng advanced 49.42 points or 0.26% to 19,001.73.