Markets trade flat after positive start ahead of interim budget

Indian equity benchmarks started the Budget day trading session on a positive note amid mixed global cues after the US Federal Reserve left rates untouched, and signalled unlikely rate cut in March. Soon, markets turned volatile and altering between gains and losses. At this point of trade, Sensex and Nifty are trading flat with positive bias. Investor’s focus is on the Budget even though it is a vote on account. Finance Minister Nirmala Sitharaman is all set to announce her sixth Budget today, which will be an Interim Budget as India is scheduled to hold its Lok Sabha elections later this year. Investors are also looking ahead to the Manufacturing PMI data to be out later in the day for more directional cues.

Sentiments got some support after Prime Minister Narendra Modi said the interim Budget to be presented in Parliament will have some ‘guiding points’ for the country’s economic growth trajectory. However, upside remained capped as the Ministry of Commerce and Industry data showed that India’s core sector output growth hit a 14-month low of 3.8 per cent year-on-year in December on the back of a high base and a moderation in the growth of six constituent sectors. 

On the global front, Asian markets are trading mixed, following the sell-off on Wall Street overnight, as traders reacted to the US Fed's highly anticipated monetary policy announcement. The Fed pushed back against bets on an interest rate cut in March. The Fed left interest rates unchanged and maintained the target range for the federal funds rate at 5.25% to 5.50% to support its dual goals of maximum employment and inflation at the rate of 2 percent over the longer run. On economic front, the latest survey from Jibun Bank showed that the manufacturing sector in Japan continued to contract in January, albeit at a marginally slower rate, with manufacturing PMI score of 48.0. 

Back home, auto stocks are in focus reacting to their monthly sales numbers. In stock specific development, Godrej Consumer Products soared on reporting a 6.4 percent rise in Q3 net profit. On the other hand,One97 Communications plummeted after the RBI barred Paytm Payments Bank from accepting deposits or top-ups in any customer account.

The BSE Sensex is currently trading at 71797.08, up by 44.97 points or 0.06% after trading in a range of 71618.36 and 72000.51. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.02%, while Small cap index was up by 0.15%.

The top gaining sectoral indices on the BSE were Power up by 1.26%, Auto up by 1.24%, Utilities up by 1.22%, FMCG up by 0.79% and PSU up by 0.66%, while Bankex down by 0.48%, Telecom down by 0.45%, Realty down by 0.24%, Consumer Durables down by 0.21% and Metal down by 0.17% were the top losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 3.06%, Power Grid up by 2.31%, Mahindra & Mahindra up by 1.83%, TCS up by 1.42% and NTPC up by 1.34%. On the flip side, Larsen & Toubro down by 1.01%, ICICI Bank down by 0.88%, JSW Steel down by 0.69%, Axis Bank down by 0.63% and Bajaj Finance down by 0.60% were the top losers.

Meanwhile, the Controller General of Accounts (CGA) in its latest data has showed that the Union government’s fiscal deficit touched Rs 9.82 lakh crore or 55 per cent of the annual Budget target at December-end 2023. In the corresponding period last year, the deficit was 59.8 per cent of the budget estimate of 2022-23. For 2023-24, the government’s fiscal deficit is estimated to be at Rs 17.86 lakh crore or 5.9 per cent of the GDP.

The government’s total revenue stood at Rs 20.71 lakh crore (76.3 per cent of corresponding BE 2023-24 of total receipts) as of December 2023. This comprised Rs 17.29 lakh crore tax revenue (net), Rs 3.12 lakh crore of non-tax revenue and Rs 29,650 crore of non-debt capital receipts. Non-debt capital receipts consist of the recovery of loans and miscellaneous capital receipts.

The CAG’s monthly account data further said Rs 7.47 lakh crore has been transferred to state governments as devolution of share of taxes by the central government up to December 2023, which is Rs 1,37,851 crore higher than the previous year. The total expenditure incurred by the Centre was Rs 30.54 lakh crore (67.8 per cent of corresponding BE 2023-24), out of which Rs 23.80 lakh crore is on revenue account and Rs 6.73 lakh crore on capital account.

Out of the total revenue expenditure, Rs 7,48,207 crore was on account of interest payments and Rs 2,76,804 crore towards major subsidies. While net tax revenues rose by 11 per cent, non-tax revenues expanded by 46 per cent on the back of the RBI dividend, amid a marginal 2 per cent growth in revenue expenditure and a robust 38 per cent year-on-year expansion in capex. Continuing the path of fiscal consolidation, the government intends to bring the fiscal deficit below 4.5 per cent of GDP by 2025-26.

The CNX Nifty is currently trading at 21743.15, up by 17.45 points or 0.08% after trading in a range of 21694.60 and 21788.35. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Maruti Suzuki up by 2.93%, Eicher Motors up by 2.56%, Cipla up by 2.48%, Power Grid up by 2.29% and Mahindra & Mahindra up by 2.12%. On the flip side, Grasim Industries down by 1.49%, Larsen & Toubro down by 1.00%, ICICI Bank down by 0.87%, JSW Steel down by 0.84% and LTIMindtree down by 0.78% were the top losers.

Asian markets are trading mixed; Hang Seng jumped 223.07 points or 1.42% to 15,708.14, KOSPI surged 33.62 points or 1.33% to 2,530.71, Jakarta Composite rose 27.86 points or 0.39% to 7,235.80 and Shanghai Composite was up by 5.48 points or 0.2% to 2,794.03. On the other hand, Nikkei 225 slipped 281.62 points or 0.78% to 36,005.09, Taiwan Weighted lost 7.33 points or 0.04% to 17,882.23 and Straits Times was down by 5.92 points or 0.19% to 3,147.09.