Trade turns choppy; markets slip into red

Trade has turned choppy for the Indian equity markets and the benchmarks have pared all their early morning and some previous day's gains in the mid morning session. Though most of the regional peers are still trading in green but some profit booking has emerged at the higher levels in the domestic markets after the surge in the previous session. However benchmark indices are managing to hold their respective psychological levels of 18000 (Sensex) and 5400 (Nifty), but the broader indices are receding much faster than their larger counterparts and the BSE Midcap index was down by 0.66% while the BSE Small cap index was down by 0.19%. Allmost all the sectoral indices barring the oil & gas index has slipped into red and the maximum pressure is appearing on the realty sector that surged in the last sessions rally.

The BSE Sensex is currently trading at 18,093.95, down by 108.25 points or 0.59%.  The index touched a high of 18,278.62 and a low of 18,093.57 respectively. There were 9 stocks advancing against 21 declines on the index.

The broader indices too have slipped into red; the BSE Mid cap and Small cap indices were up by 0.66% and 0.19% respectively.

In BSE sectoral indices now only Oil & Gas sector was trading in green, up by 0.37%. On the other hand Realty was down by 2.34%, CG was down by 1.37%, Metal was down by 1.23%, HC down by 0.92% and IT was down by 0.83%.

The top gainers of the BSE Sensex were Tata Power up by 1.80%, Bajaj Auto up by 1.68%, RCom up by 1.13%, RIL up by 0.79% and HUL was up by 0.51%.

The losers on the BSE were, JP Associates down by 3.78%, M&M down by 2.98%, TCS down by 2.98%, BHEL down by 2.91% and Hindalco Industries was down by 2.80%.

Meanwhile, the fiscal deficit of the Union Government is likely to remain close to 5% for the next fiscal as well. Most economists feel that somewhat higher deficit can stem from increasing expenditure needs to continue and expand the social sector schemes like the national rural employment guarantee scheme etc.

While the government is committed to fiscal consolidation, it will not be easy for it to bring down the fiscal deficit in a hurry. The government had in last Budget accepted the revised timeline for fiscal consolidation as recommended by the Thirteenth Finance Commission (TFC). The finance ministry is in pretty good position to meet the deficit target for current fiscal despite higher spending on subsidies, due to bumper revenue on the non-tax frontier from the third generation (3G) telecom spectrum auction.

However, things will be much more difficult in the next fiscal. There will be no onetime major receipt like the one from spectrum auction this fiscal. Spending on the other hand, will continue to surge as allocation for social sector schemes is likely to show substantial increase. With commodity prices surging, fuel and fertilizer subsidy will also remain high.

In this wake, while the finance ministry will manage deficit target for current fiscal easily, it will be significantly challenging to bring it further down for the next fiscal in line with TFC's recommendations. However, going by the statements of finance ministry so far, it does seem very much inclined to follow the TFC's time path for fiscal consolidation. It will be interesting to see therefore how the finance ministry manages the trade-off between social inclusion and fiscal deficit.

The S&P CNX Nifty is currently trading at 5,425.90, down by 30.00 points or 0.55%. The index touched a high of 5,474.45 and 5,425.45 respectively. There were 11 stocks advancing against 39 declines on the index.

The top gainers of the Nifty were BPCL up by 2.32%, Tata Power up by 2.31%, Bajaj Auto up by 1.62%, RCom up by 1.03% and Reliance Industries was up by 0.95%.

The top losers of the index were JP Associates down by 3.88%, M&M down by 2.97%, Hindalco down by 2.96%, TCS down by 2.89% and DLF was down by 2.51%.

Asian markets were trading mixed with few more indices have joined the losing side; Shanghai composite was up by 0.73%, Nikkei 225 was up by 0.20% and Taiwan Weighted was up by 0.50%.

On the other hand Hang Seng was down by 0.45%, Straits Times was down by 0.63% and Seoul Composite was lower by 0.29%.

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