Markets recover from day’s lows to trade flat

Domestic equity markets recovered from day’s lows and were trading flat in late morning deals. Buying in Larsen & Toubro, Kotak Mahindra Bank, HDFC Bank, NTPC and Bajaj Finance helped the markets to recover from day’s low. Meanwhile, broader indices were trading in green with BSE Mid cap index and Small cap index gaining in the range of 0.35-0.60%. Traders were getting some relief as Union Education Minister Dharmendra Pradhan asserted that India will become a $30 trillion-economy by 2047. Pradhan said that India, the fastest-growing global economy, is currently in the fifth position and will bag the third spot in the next three years. On the BSE sectoral front, traders were seen pilling up positions in Capital Goods, Industrials, Power, Consumer Durables and Telecom, while selling was witnessed in FMCG, Metal, Basic Materials, Healthcare and TECK.

On the global front, Asian markets were trading mostly in red amid political turmoil in South Korea. Back home, in the stock specific development, Biocon fell after the company has received an Establishment Inspection Report (EIR) with a Voluntary Action Indicated (VAI) status from the United States Food and Drug Administration (USFDA), for its active pharmaceutical ingredient (API) facility (Site 2), located at Special Economic Zone (SEZ) Plot number 2,3,4 and 5 Bommasandra-Jigani link road, Bengaluru, Karnataka.   

The BSE Sensex is currently trading at 81731.11, up by 21.99 points or 0.03% after trading in a range of 81411.55 and 81781.72. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.38%, while Small cap index up by 0.56%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.34%, Industrials up by 1.15%, Power up by 0.58%, Consumer Durables up by 0.51% and Telecom up by 0.42%, while FMCG down by 1.72%, Metal down by 0.97%, Basic Materials down by 0.49%, Healthcare down by 0.46% and TECK down by 0.29% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 2.23%, Kotak Mahindra Bank up by 1.31%, HDFC Bank up by 1.06%, NTPC up by 0.50% and Bajaj Finance up by 0.39%. On the flip side, Hindustan Unilever down by 3.69%, Nestle down by 1.97%, Asian Paints down by 1.34%, Infosys down by 0.95% and Tata Steel down by 0.94% were the top losers.

Meanwhile, the Confederation of Indian Industry (CII) has suggested the government to stick to the fiscal deficit target of 4.9 per cent of GDP for 2024-25 and 4.5 per cent for 2025-26, and cautioned that overly aggressive targets beyond these could adversely affect India's economic growth. It noted that India has been growing rapidly amidst a slowing global economy and prudent fiscal management for macroeconomic stability has been pivotal to this growth.

CII highlighted the announcement in the Union Budget 2024-25 to keep the fiscal deficit at levels that help reduce the debt-to-GDP ratio. In preparation for this, it has suggested the forthcoming budget could lay out a glide path to bring the central government's debt to below 50 per cent of GDP in the medium term (by 2030-31), and below 40 per cent of GDP in the long term. Such an explicit target will have a positive impact on India's sovereign credit rating and further on the interest rates in the economy.

To aid longer-term fiscal planning, the government should consider instituting Fiscal Stability Reporting. This could include issuing annual reports on fiscal risks under different stress scenarios and the outlook for fiscal stability. The exercise will help forecast potential economic headwinds or tailwinds and assess their impact on the fiscal path. The reporting can also include long-term (10-25 years) forecasting of fiscal positions, accounting for the impact of factors like economic growth, technological change, climate change, demographic changes, etc. Several countries have adopted this proactive ranging from 10 years in Brazil to 50 years in the UK. 

CII has suggested three interventions to nudge states towards fiscal prudence. Firstly, the states could be encouraged to institute state-level Fiscal Stability Reporting. Secondly, states have been allowed to borrow directly from the market, following the recommendations of the 12th Finance Commission. States also provide guarantees in case of borrowing by state PSEs, which have implications for the state's fiscal health. Third, the central government could create an independent and transparent credit rating system for states to incentivise them to maintain fiscal prudence. 

The CNX Nifty is currently trading at 24670.90, down by 6.90 points or 0.03% after trading in a range of 24580.05 and 24705.00. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 2.25%, SBI Life up by 1.54%, Kotak Mahindra Bank up by 1.31%, HDFC Bank up by 1.15% and HDFC Life up by 0.86%. On the flip side, Tata Consumer down by 3.77%, Hindustan Unilever down by 3.69%, Hindalco down by 2.34%, Nestle down by 2.06% and Britannia down by 1.75% were the top losers.

Asian markets were trading mostly in red; Hang Seng declined 113.76 points or 0.58% to 19,752.09, Shanghai Composite weakened 4.73 points or 0.14% to 3,399.35, Straits Times fell 3.66 points or 0.1% to 3,792.50, KOSPI dropped 60.15 points or 2.54% to 2,368.01 and Nikkei 225 slipped 26.1 points or 0.07% to 39,065.07. However, Taiwan Weighted added 28.84 points or 0.12% to 23,222.11 and Jakarta Composite gained 26.8 points or 0.36% to 7,409.59.