Benchmarks trade flat in early deals

Indian equity benchmarks made cautious start on Wednesday amid a fresh spike in US bond yields and Crude oil prices. Domestic indices are struggling for direction and now trading flat in early deals as investors assessed geopolitical developments after a huge explosion at a Gaza hospital derailed the diplomatic efforts led by the U.S. to mobilize support for Israel's right to defend itself. Israel blamed a failed missile from militant group Palestinian Islamic Jihad for the blast, which killed about 500 people. Some cautiousness also came in as ratings agency ICRA said borrowing costs for state governments and union territories are expected to increase in the second half of Financial Year 2023-24 (FY24) on rising bond yields and widening of spreads up to 15 basis points. However, downside remained capped amid foreign fund inflows. According to the provisional data available on the NSE, foreign institutional investors (FII) purchased shares worth net Rs 263.68 crore on October 17, 2023. 

On the global front, most of the Asian markets are trading lower, following the mixed cues from global markets overnight, as data showing a bigger than expected increase in U.S. retail sales in September raised concerns the US Fed will keep interest rates higher for longer or even announce a rate hike this year. Meanwhile, China's economy grew at a faster-than-expected clip in the third quarter from a year earlier. Gross domestic product (GDP) grew 4.9 per cent in July-September.

Back home, the Centre announced a cut on the windfall tax on petroleum crude, aviation turbine fuel, and diesel. As per a government notification, the special additional excise duty (SAED) on crude petroleum has now been reduced to Rs 9,050 per tonne from Rs 12,100 per tonne, effective October 18. In stock specific development, Hudco tumbled as the government began selling 7% stake in Hudco through the offer for sale (OFS) route. It has put on the block a total of 140 million shares at a floor price of Rs 79 per share.

The BSE Sensex is currently trading at 66411.45, down by 16.64 points or 0.03% after trading in a range of 66266.68 and 66473.74. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.21%, while Small cap index was up by 0.42%.

The top gaining sectoral indices on the BSE were Metal up by 0.73%, Healthcare up by 0.54%, Telecom up by 0.49%, Basic Materials up by 0.38% and Industrials up by 0.35%, while Realty down by 0.31%, Bankex down by 0.19% and Utilities down by 0.01% were the few losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 1.11%, ITC up by 0.93%, Sun Pharma up by 0.76%, JSW Steel up by 0.70% and Tata Steel up by 0.63%. On the flip side, Bajaj Finance down by 1.22%, Bajaj Finserv down by 0.79%, Power Grid down by 0.77%, ICICI Bank down by 0.70% and HDFC Bank down by 0.56% were the top losers.

Meanwhile, Icra Ratings in its latest report said that States are on course to spend 29 per cent more on capital expenditure in the ongoing fiscal, aided by additional central grants and market borrowings. It added the increased capex spending will see their debt-level in relation to their gross domestic product rising to 30 per cent from 28.9 per cent in FY23. It said the combined capital spending of 13 major states will rise 29 per cent this fiscal to Rs 6.2 lakh crore from Rs 4.8 lakh crore in FY23. However, despite the year-on-year growth, the capex spending is likely to be Rs 50,000 crore lower than the FY24 Budget estimates of Rs 6.7 lakh crore.

The ratings agency said the aggregate fiscal deficit of these states for FY24 is expected to go up by Rs 60,000 crore to Rs 8.3 lakh crore as against the budgeted estimate of Rs 7.7 lakh crore. With revenue likely to trail budgeted targets, revenue and fiscal deficits of these states are expected to be Rs 2.1 lakh crore and Rs 8.3 lakh crore, respectively, exceeding the FY24 Budget estimates of Rs 1.4 lakh crore and Rs 7.7 lakh crore, respectively. This will push up the leverage levels - debt and guarantees - of these states to 30 per cent of their gross state domestic product (GSDP) in FY24 from 28.9 per cent in FY23. 

Some of these 13 states have adequate funds to complete 90-100 per cent of their budgeted capex in FY24, while only a few of them have to compress their capex by a sizeable extent, such as Punjab. Notably, some states' net borrowing ceiling for FY24 will be adjusted by the Centre on account of their incremental off-budget borrowings in FY22. The agency sees the combined revenue deficit of these 13 states to come in at Rs 2.1 lakh crore, higher than Rs 1.4 lakh crore in the FY24 budget estimates and nearly twice as high as the Rs 1.1 lakh crore in FY23.

The CNX Nifty is currently trading at 19816.25, up by 4.75 points or 0.02% after trading in a range of 19774.80 and 19824.45. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Cipla up by 2.51%, Hindalco up by 1.54%, Dr. Reddy's Lab up by 1.35%, Tata Motors up by 1.11% and ITC up by 0.96%. On the flip side, Bajaj Finance down by 1.30%, Power Grid down by 0.82%, LTIMindtree down by 0.78%, Apollo Hospital down by 0.77% and Bajaj Finserv down by 0.71% were the top losers.

Asian markets are trading mostly in red; Taiwan Weighted lost 185.78 points or 1.12% to 16,456.77, Nikkei 225 slipped 47.25 points or 0.15% to 31,993.04, Straits Times fell 20.27 points or 0.64% to 3,151.56, Shanghai Composite weakened 18.74 points or 0.61% to 3,064.76, Hang Seng declined 18.43 points or 0.1% to 17,754.91 and Jakarta Composite was down by 6.48 points or 0.09% to 6,933.14, while KOSPI increased 0.89 points or 0.04% to 2,461.06.