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Benchmarks trade lackluster; Nifty below 10,800 mark
Sep-19-2019

Indian equity benchmarks made weak start and are trading lower with cut of around half a percent each in early deals on Thursday. Barring Auto and Telecom, all the sectoral indices were trading in red on BSE. Traders were concerned with report that as against a steep 17.5 percent higher tax collection budgeted for FY20, the government could mop-up only 4.7 percent more so far this year, with the direct tax kitty growing to Rs 5.50 lakh crore as of September 17, up from Rs 5.25 lakh crore a year-ago. The lower mop-up reflects the deepening slump in demand and overall growth. Some cautiousness also came with the India Meteorological Department’s (IMD) report that monsoon rains in India in the week to September 18 were above average for a third straight week, with floods hitting many districts in the central parts of the country and damaging crops such as soybean and pulses. However, investor overlooked Niti Aayog CEO Amitabh Kant’s statement that the government is doing everything possible to turn around the Indian economy and bring it back to a high trajectory growth path.

On the global front, Asian markets were trading mostly in red after the US Federal Reserve announced its widely expected decision to cut interest rates for the second time this year, but offered mixed signals about the outlook for interest rates. Investors also look ahead to the Bank of Japan's monetary policy decision due later today. The central bank is widely expected to keep its benchmark lending rate unchanged at -0.1 percent, although it may introduce other means of stimulus.

Back home, ratings agency ICRA said that India’s steel consumption growth is likely to decelerate to six per cent in the current financial year, due to the economic slowdown. However, the profitability of steelmakers may recover somewhat in the third quarter of 2019-20, with a sharp fall in prices of coking coal, key steel-making ingredient, in August 2019. Telecom stocks were in focus with data from telecom regulator Trai showing that the number of wireline telecom subscribers in the country shrunk to 21.17 million in June, about 0.56 per cent lower than the previous month.

The BSE Sensex is currently trading at 36363.77, down by 200.11 points or 0.55% after trading in a range of 36318.04 and 36613.93. There were 10 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.23%, while Small cap index was down by 0.25%.

The only gaining sectoral indices on the BSE were Auto up by 0.36% and Telecom was up by 0.08%, while IT down by 1.05%, Bankex down by 1.00%, TECK down by 1.00%, PSU down by 0.90% and Metal was down by 0.83% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 1.11%, Tata Motors - DVR up by 1.07%, Maruti Suzuki up by 0.88%, Asian Paints up by 0.74% and HDFC Bank up by 0.30%. On the flip side, Yes Bank down by 4.37%, ICICI Bank down by 2.42%, Tech Mahindra down by 1.83%, Tata Steel down by 1.80% and Indusind Bank down by 1.73% were the top losers.

Meanwhile, the government’s total direct tax collection has increased to Rs 5.50 lakh crore as of September 17, 2019 for the fiscal year 2019-20 (FY20), up from Rs 5.25 lakh crore a year-ago. Though, as against a steep 17.5 percent higher tax collection budgeted for the full year, the government could mop-up only 4.7 percent more so far in FY20. The lower mop-up reflects the deepening slump in demand and overall growth. In the first quarter the Gross Domestic Product (GDP) slowed to a six-year low of 5 percent.

Of the Rs 5.50 lakh crore collections, advance tax rose a tepid 7.3 percent to Rs 2.20 lakh crore from Rs 2.05 crore. Besides, net tax collection is around Rs 4.5 lakh crore as compared to Rs 4.25 lakh crore as of date. April-September advance tax collection rose to Rs 2.20 lakh crore from Rs 2.05 lakh crore. Advance corporation tax rose only 3.5 percent, while the personal income tax paid in advance rose 7.5 percent.

The numbers are disturbing for the government as it has already used up as much as 77 percent of its budgeted fiscal deficit for the full year by July itself. This is 1.4 percentages point higher than the comparable period last year. Fiscal deficit crossed 77 percent of the annual target in July at Rs 5,47,605 crore, against a target of Rs 7,03,760 crore for the full year. In FY19, direct tax collection was Rs 50,000 crore short of the Rs 12 lakh crore target.

The CNX Nifty is currently trading at 10787.25, down by 53.40 points or 0.49% after trading in a range of 10766.05 and 10845.20. There were 15 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 1.40%, Maruti Suzuki up by 1.06%, Asian Paints up by 0.61%, Eicher Motors up by 0.49% and Bharti Airtel up by 0.42%. On the flip side, Yes Bank down by 4.68%, Zee Entertainment down by 2.74%, ICICI Bank down by 2.22%, Indusind Bank down by 2.03% and Tech Mahindra down by 1.85% were the top losers.

Asian market were trading mostly in red; Hang Seng decreased  332.21 points or  1.24% to 26,421.91, Taiwan Weighted dropped  40.63 points or  0.37% to 10,888.82, Jakarta Composite lost  21.26 points or  0.34% to 6,255.37 and Straits Times trembled  7.20 points or  0.23% to 3,159.64. On the flip side, KOSPI rose 5.08 points or 0.25% to 2,075.81 and Nikkei 225 was up by 111.25 points or 0.51% to 22,071.96. Shanghai Composite traded almost flat at 2,985.66.
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