Benchmarks edge lower in late morning

Benchmarks edged lower in late morning trade due to Profit-booking by participants after three sessions of gains. Sentiments remained dampened after foreign lender HSBC said it sees government breaching its FY14 fiscal deficit target of 4.8% on account of slower revenue and higher expenditure in the first half of the fiscal. Even as Finance Minister P Chidambaram has been reiterating of not breaching the red line on fiscal deficit target, HSBC expects spending-revenue gap to overshoot to 5.1%.

On the global front, weak cues from Asian markets too dampened the sentiments with most of the regional counters trading lower with investors treading cautiously following flat close on Wall Street overnight. Meanwhile, the Japanese stock market was trading weak, with investors indulging in some profit taking after recent strong gains. Back home, traders were buying, IT, Teck and Healthcare while selling were seen in Power, Capital Goods and Bankex on the BSE. The market breadth on BSE remains negative with advances to declines in the ratio of 742:937. BSE Sensex and NSE Nifty were comfortably trading near their psychological 21,200 and 6,300 levels respectively.

The BSE Sensex is currently trading at 21281.43 down by 44.99 points or 0.21% after trading in a range of 21327.75 and 21239.02. There were 12 stocks advancing against 18 declines on the index. The broader indices were trading mixed; the BSE Mid cap index was up by 0.07% and Small cap index lost 0.20%.

The top gaining sectoral indices on the BSE were, IT up by 1.81%, Teck up by 1.53%, Healthcare up by 0.37% ,Consumer Durables up by 0.28%, and FMCG up by 0.26%, while Power down by 3.93%, Capital Goods down by 2.71%, Bankex down by 1.06%, Realty down by 0.24% and  PSU down by 0.03% were the top losers on the sectoral index.

The top gainers on the Sensex were TCS up by 3.18%, Wipro up by 2.01%, SSLT up by 1.54%, Cipla up by 1.39% and Bajaj Auto up by 1.27%. On the flip side, NTPC was down by 9.95%, BHEL was down by 4.46%, L&T was down by 3.41%, ICICI Bank was down by 2.20% and ONGC was down by 1.92%  were the top losers on the Sensex.

Meanwhile, The Reserve Bank of India (RBI) governor Raghuram Rajan has attributed the current economic woes to stimulus provided by the Government to tide over the global crisis of 2008, which eventually led to an overheated economy, high inflation and uncomfortable fiscal and current account deficits. Rajan added that Indian economy has slowed to below 5 percent from an average of 8 percent between 2002-2012, mainly on account of domestic factors like institutional weakness, withdrawal of stimulus and partially due to global factors.

By adding further, the RBI governor said that in order to combat the impact of global financial meltdown of 2008, Finance Minister Pranab Mukherjee gave three stimulus packages to the industry. As a result, the current account deficit (CAD), which is the difference between inflow and outflow of foreign exchange, rose to a record high of 4.8 percent of GDP in FY13, from 2.8 percent in FY11. Meanwhile, the governor has expressed optimism that country’s CAD is likely to come down at around 3 percent of GDP for the current fiscal on the back of measures taken by the Indian authorities. Owing to the measures taken by the government and the RBI to increase inflow and restrict gold imports, the CAD moderated to 3.1 percent of the GDP in first half of current fiscal as compared to 4.5 percent of GDP in the same period of previous fiscal.

Further, Rajan hoped that on a more long-term basis, inflation indexed bonds would help reduce gold demand, a major factor for widening CAD. On fiscal deficit front, Raghuram Rajan expressed optimism that country’s fiscal deficit is likely to meet the budget target of 4.8 percent of GDP in current fiscal, but could result in a contraction in spending, depending on the extent of revenue shortfall. The fiscal deficit of the country stood at 4.9 percent of GDP in the previous financial year. The governor has also expressed the need to improve the financial system by clarifying monetary policy framework, strengthening the banking structure through new entry or bank expansion and broadening financial markets, among others.

The CNX Nifty is currently trading at 6,343.25 down by 20.65 points or 0.32% after trading in a range of 6,362.25 and 6,335.60. There were 20 stocks advancing against 30 stock declines on the index.

The top gainers of the Nifty were TCS up by 2.56%, Wipro up by 1.98%, Bajaj-Auto up by 1.44%, HCL Tech up by 1.32% and Cipla up by 1.18%. On the flip side, NTPC down by 10.20%, BHEL down by 5.04%, L&T down by 3.61%, Power Grid down by 2.81% and NMDC down by 2.31% were the major losers on the index.

Most of the Asian equity indices were trading in red; Hang Seng slipped 35.97 points or 0.15% to 23,775.20, Nikkei 225 decreased 46.74 points or 0.17% to 15,608.21, Straits Times shed 10.87 points or 0.35% to 3,102.77, Seoul Composite contracted 7.15 points or 0.36% to 1,993.23 and Taiwan Weighted was down by 5.28 points or 0.06% to 8,434.35. On the flip side, Shanghai Composite rose 3.87 points or 0.17% to 2,242.07, Jakarta Composite surged 49.87 points or 1.18% to 4,264.21 and KLSE Composite was up by 2.29 points or 0.12% to 1,844.16.