Benchmarks slip into red; broader indices showcase mixed trend

Benchmarks after starting on a firm note have reversed their direction to trade in "red" despite positive global leads as fresh short created by wary investors have offset the positive momentum prevailing on account of bargain buying. In the early deals hunters ploughed back into beaten-down stocks following last week's plunge over worries about the health of the global economy. However, with data showing FII shunning the Indian equities and resorting to the safety of safe heaven instruments spooked the sentiment drastically. International spot gold soared to an all-time high above $1,910 on Tuesday, scoring a record top for a fourth consecutive session, as persistent worries about global economic growth burnished bullion's safe-haven appeal.

On the global front, U.S. stocks ended slightly higher on Monday after four weeks of losses as investors hesitated to take big risks without a catalyst for buying. The Dow Jones industrial average ended up by 0.34 percent, at 10,854.50. The Standard & Poor's 500 Index was up 0.29 point, or 0.03 percent, at 1,123.82. The Nasdaq Composite Index was up 3.54 points, or 0.15 percent, at 2,345.38. Meanwhile, Asian shares were trading in jubilant mood thanks to bargain hunting and a positive lead from Wall Street, with Japanese stocks being supported by a stable yen-dollar. The US future indices too were showing an uptick in the screen trade.

Back home, on the BSE sectoral front the turnaround of realty stocks into red has mainly led to the weakness of the bourses, however down trend of stocks from Auto, Oil & Gas and Fast Moving Consumer goods counters too has added fuel to the plunge of the markets. On the flip side, stocks from TECk, Information Technology and Consumer Durable space are striving hard for the comfort of the bourses. The 30 scrip sensitive index after facing resistance close to 16400 level has again shrunk back to 16200 level. Meanwhile the 50 share index too after surpassing the 4900 level has retreated to its 4800 level. However, the broader indices are showcasing mixed trend. The overall market breadth on BSE is still in the favour of advances which have outpaced declines in the ratio of 1095:915, while 92 shares have remained unchanged.

The BSE Sensex is currently trading at 16,266.29 down by 75.41 points or 0.46%. The index has touched a high and low of 16,446.85 and 16,213.18 respectively.  There were 11 stocks advancing against 19 declines on the index.

The broader indices were showcasing mixed trend; as BSE Mid cap index was down by 0.46%, while Small cap index was up by 0.17%.

The top gaining sectoral indices on the BSE were, TECk up by 0.93%, IT up by 0.91%, CD up by 0.82% and CG up by 0.54%. While, Auto down by 1.01%, Oil and Gas down by 0.81% FMCG down by 0.70%, PSU down by 0.69% and Metal down by 0.69% were the top losers on the index.

The top gainers on the Sensex were Bajaj Auto and Jindal Steel were up by 4.28%, Jaiprakash Associate up by 4.03%, Bharti Airtel up by 3.92% and BHEL up by 1.63%.

On the flip side, Coal India was down by 2.68%, Cipla down by 2.31%, M&M down by 2.29%, Tata motors was down by 2.08% and DLF was down by 1.63% were the top losers on the Sensex.

Meanwhile, the Planning Commission chaired by the Prime Minister Manmohan Singh, has reduced its fiscal consolidation targets compared to the recommendations given by the 13th Finance Commission. The planning commission estimated the government's fiscal deficit to come down to 3% of the gross domestic product (GDP) by 2014-15, third year of the next five year plan and then to stay there for remaining years of 12th plan. However, the onetime payments such as spectrum sale or disinvestment in the Public Sector Units (PSUs) are not likely to give this much of revenue as a proportion of the GDP.  On the other hand, the Finance Commission wanted the government to reduce its fiscal deficit to 3% by 2013-14, the second year of the next five year plan, a year ahead than the Planning Commission's projection. For 2013-14, the planning commission expected the deficit to be 3.5% of the GDP. Initially, as per the Fiscal Responsibility and Budgetary Management (FRBM) Act, the central government's fiscal deficit was expected to reduce at 3% of GDP by the 2008-09. However, because of the global financial crisis, the government was forced to give stimulus packages, doubling the fiscal deficit to more than 6%.

The approach paper to the 12th Five-Year Plan assumes that the fiscal deficit figures to decline, mainly on the back of the healthy tax collections. The fiscal deficit estimations are based on the assumption of 14% nominal GDP growth rate a year on an average in the 12th plan, including 9% GDP growth and 5% inflation. 

For the first year of 12th Five-Year Plan i.e. 2012-13, the approach paper, estimates fiscal deficit to be around 4.10% of the GDP. For the current financial year, government has targeted fiscal deficit to be around 4.6% of the GDP, for the 2010-11, fiscal deficit was 4.7%. The approach paper of 12th plan, also estimates that the net revenue of the central government is likely to increase to 8.91% of GDP in 2016-17, the terminal year of 12th plan from 7.4% of GDP on 2011-12.

However, the approach paper, expects non-tax revenue to decline from the current level of 1.4% in 2011-12 to 0.88% in 2016-17. This estimated decline in non-tax revenue would be because of absence of any prospect of large revenues from one time sale such as spectrum. The planning commission also expects that the share of non-debt capital receipts, which includes disinvestment of PSUs process.

The central government's aggregate resources are also likely to decline from 14.01% of GDP in 2011-12 to 13.11% of the GDP in 2016-17.  As per the approach paper of the 12th plan, the subsidies or non planned expenditure that are likely to account for 18.8% of the total non-plan expenditure in the 12th plan are estimated to reduce from an estimated 1.6% of the GDP in 2011-2012, which is based on the Budget estimates, to 1.24% of the GDP in the terminal year. The decline in subsidies is serious from the resource point of view as in the past subsidies have been increasing as a percentage of GDP. Other alternative solution would be to increase the Tax GDP ratio by more than 12% of the GDP.   The S&P CNX Nifty is currently trading at 4,881.55, lower by 17.25 points or 0.35%.  The index has touched a high and low of 4,927.70 and 4,863.80 respectively. There were 17 stocks advancing against 33 declines on the index.

The top gainers of the Nifty were TCS up by 2.49%, Bharti Airtel up by 1.48%, BHEL up by 1.45%, Axis Bank up by 1.33% and Jindal Steel up by 1.00%.

On the flip side, Cipla down by 2.53%, Tata Motors down by 2.24%, M&M down by 2.21%, Cairn India down by 1.99% and ICICI bank down by 1.77%, were the major losers on the index.

All the Asian equity indices were trading in the green; Shanghai Composite was up 0.72%, Hang Seng was up by 0.56%, Jakarta Composite was up by 0.44%, KLSE Composite was up by 0.08%, Nikkei 225 was up by 1.13%, Straits Times was up by 0.81%, Seoul Composite was up by 3.86% and Taiwan Weighted was up by 2.93%. 

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