Domestic indices trade lower in early deals; IT, TECK drag markets

Indian equity benchmarks made negative start on Thursday amid mixed global cues and ahead of long weekend holiday. Domestic indices are trading lower with cut of around 0.35% each in early deals as selling pressure in IT and TECK counters dragged markets lower. Some volatility persists in the markets amid the monthly expiry of the January F&O contracts. Foreign fund outflows also dented sentiments. Foreign institutional investors (FIIs) maintained selling pressure in the cash segment for six days in a row, offloading shares worth Rs 6,934.93 crore on January 24, provisional data from the NSE showed. Besides, the Economic Research Department of the State Bank of India (SBI) in its report said the fiscal deficit for the fiscal year 2024-25 is anticipated to be set close to 5.5 per cent of the Gross Domestic Product (GDP). 

On the global front, most of the Asian markets are trading higher, following the mostly higher cues from Wall Street overnight and boosted by strong gains in the Chinese and Hong Kong market after China announced fresh stimulus in a bid to boost the country's struggling economy. China unexpectedly announced it will reduce banks' reserve ratio by 50 basis points next month which will help infuse cash into the banking system. 

Back home, the India Meteorological Department (IMD) expects the persisting El Nino conditions to turn ‘neutral’ prior to the start of monsoon season in June. Neutral El Nino conditions imply that it would not have an adverse impact on the monsoon rains next season. In stock specific development, shares of Tech Mahindra fell following a disappointing set of numbers posted by the company for the December quarter.

The BSE Sensex is currently trading at 70785.08, down by 275.23 points or 0.39% after trading in a range of 70733.82 and 71049.46. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.19%, while Small cap index was up by 0.68%.

The top gaining sectoral indices on the BSE were Utilities up by 1.61%, Power up by 1.25%, Realty up by 1.04%, PSU up by 0.93% and Energy up by 0.49%, while IT down by 0.87%, TECK down by 0.78%, Bankex down by 0.48%, Healthcare down by 0.39% and Consumer Durables down by 0.32% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 1.83%, Indusind Bank up by 1.71%, Hindustan Unilever up by 0.76%, Bajaj Finance up by 0.44% and Power Grid up by 0.39%. On the flip side, Tech Mahindra down by 4.71%, Axis Bank down by 1.55%, HCL Technologies down by 1.47%, TCS down by 1.03% and HDFC Bank down by 0.86% were the top losers.

Meanwhile, the State Bank of India (SBI) in its latest report has anticipated fiscal deficit for the fiscal year 2024-25 (FY25) to be set close to 5.5 per cent of the Gross Domestic Product (GDP). The Economic Research Department of SBI has released a comprehensive research report forecasting the fiscal scenario for the upcoming financial years. Significantly, the SBI noted that the Gross Tax to GDP ratio is at a 16-year high in the current fiscal year (FY24) and could potentially reach its highest point in the last two decades in FY25. The report highlights the Interim Budget, set against the backdrop of a robust 7.3 per cent growth in the current fiscal year. This momentum positions the government to work towards the path of fiscal consolidation.

The research suggests that net tax revenue is likely to surpass budget estimates by Rs 80,000 crore, with non-tax revenue exceeding estimates by Rs 50,000 crore. Despite an anticipated expenditure surpassing budget estimates by around Rs 60,000 crore, the report suggests the government can optimize the fiscal situation by employing an automatic fiscal stabilizer based on just-in-time fund releases aligned with spending patterns across various ministries.

In terms of tax revenue, the report predicts that the gross tax revenue, which is currently at 11.6 per cent of GDP in FY24, is poised to reach a 16-year high. Further, in FY25, it is expected to achieve the highest levels witnessed in the last two decades. The report estimates the net market borrowing of the Centre to be approximately Rs 11.7 lakh crore in FY25. With repayments of Rs 3.6 lakh crore, gross borrowings are anticipated to be around Rs 15.3 lakh crore. However, the government may utilise switches to adjust gross borrowings lower than this figure. Additionally, the report foresees a net issuance of T-Bills to the tune of Rs 50,000 crore.

On the financing to close the fiscal deficit, the report suggests the government's reliance on small saving schemes will persist. A targeted push towards schemes such as Sukanya Samriddhi Yojana (SSY) is recommended, including encouraging fresh registrations in a mission-driven mode. Utilizing Business Correspondent (BC) channel partners in banks is also advised to enhance the outreach of such schemes. The report anticipates the government's focus on solar rooftops, aligning with Prime Minister Narendra Modi's vision to reach 1 crore households. Similarly, a roadmap for a significant push to the Pradhan Mantri Awas Yojana (PMAY) is expected. Utilizing land banks available across states to provide housing units for slum dwellers and marginalized segments of the population is proposed as a constructive measure.

The CNX Nifty is currently trading at 21385.90, down by 68.05 points or 0.32% after trading in a range of 21372.05 and 21459.00. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were NTPC up by 1.88%, Indusind Bank up by 1.67%, Coal India up by 1.37%, Britannia Industries up by 1.26% and BPCL up by 1.06%. On the flip side, Tech Mahindra down by 4.73%, Axis Bank down by 1.64%, HCL Tech down by 1.55%, SBI Life Insurance down by 1.20% and Cipla down by 0.89% were the top losers.

Asian markets are trading mostly in green; Hang Seng jumped 223.03 points or 1.38% to 16,122.90, Taiwan Weighted surged 110.4 points or 0.62% to 17,986.23, Shanghai Composite strengthened 58.06 points or 2.02% to 2,878.83, Nikkei 225 rose 21.02 points or 0.06% to 36,247.50 and Jakarta Composite was up by 15.12 points or 0.21% to 7,242.94. On the other hand, Straits Times fell 10.86 points or 0.34% to 3,142.47 and KOSPI was down by 0.49 points or 0.02% to 2,469.20.