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Indian equity benchmarks gave up early gains to end marginally lower on Tuesday, as investors fretted over rising cases of Covid-19 cases in the country and amid new localised restrictions.  Key indices made positive start, as traders found some support with the government data showing that the country's exports rose marginally by 0.67 per cent year-on-year to $27.93 billion in February, growing for the third consecutive month, even as trade deficit widened to $12.62 billion. Imports rose by 6.96 per cent to $40.54 billion in the month. Domestic sentiments were optimistic, as the finance ministry said it has released the full Rs 1.10 lakh crore estimated GST compensation shortfall to the states with the release of final weekly installment of Rs 4,104 crore. With the release of the 20th installment, 100 per cent of the total estimated GST compensation shortfall of Rs 1.10 lakh crore for the year 2020-21 has now been released to the states and UTs with Legislative Assembly.

However, domestic equities gave up initial gains and traded flat towards the final hours of the day, as traders turned cautious with Credit rating agency ICRA’s report stated that the states may face a shortfall of Rs 2.7-3 lakh crore as Goods and Services Tax (GST) compensation from the Centre next fiscal. Out of that amount, the shortfall from cess collections will be at Rs 1.6-2 lakh crore. Some concern also came as India reported 24,366 fresh Covid-19 cases on Monday pushing the overall tally to 11,409,524, according to Worldometer. The death toll from the deadly infection jumped to 158,892. Besides, a report stated that Cinema halls, hotels, restaurants and offices except those related to health and essential services in Maharashtra will function at 50 percent capacity till March 31.

On the global front, Asian markets finished mostly in green on Tuesday as investors continued to buy cyclical shares on optimism about the economic reopening from the coronavirus pandemic. European markets were trading higher, as investors digested a slew of earnings updates and looked ahead to a Federal Reserve policy meeting to see what the updated language and economic forecasts look like. Back home, on the sectoral front, aviation industry stocks were in focus with ICRA’s report that the domestic airport sector is expected to incur a net loss of Rs 5,400 crore, and cash loss of Rs 3,500 crore in FY21, impacted by a 66 per cent year-on-year slip in passenger traffic amid COVID-19 induced travel restrictions. Oil & gas sector stocks were in watch as finance minister Nirmala Sitharaman said at present, there is no proposal to bring crude petroleum, petrol, diesel, ATF and natural gas under GST.

Finally, the BSE Sensex fell 31.12 points or 0.06% to 50,363.96, while the CNX Nifty was down by 19.05 points or 0.13% to 14,910.45.  

The BSE Sensex touched high and low of 50,857.98 and 50,289.44, respectively. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.40%, while Small cap index was up by 0.32%.

The top gaining sectoral indices on the BSE were IT up by 1.35%, TECK up by 1.08%, Telecom up by 0.99%, FMCG up by 0.92%, Consumer Discretionary up by 0.38% while, Bankex down by 1.03%, Metal down by 0.65%, Finance down by 0.66%, Realty down by 0.64% and Capital Goods down by 0.49% down by 0.42% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 4.87%, Dr. Reddys Lab up by 2.44%, Hindustan Unilever up by 1.48%, HCL Technologies up by 1.43% and TCS up by 1.38%. On the flip side, Larsen & Toubro down by 1.56%, ICICI Bank down by 1.38%, SBI down by 1.37%, HDFC Bank down by 1.07% and HDFC down by 0.96% were the top losers.

Meanwhile, Credit rating agency ICRA in its latest report has said that the states may face a shortfall of Rs 2.7-3 lakh crore as Goods and Services Tax (GST) compensation from the Centre next fiscal. Out of that amount, the shortfall from cess collections will be at Rs 1.6-2 lakh crore. In FY21, the states were facing a shortfall of Rs 1.1 lakh crore in GST compensation from the Centre but over 90 per cent of that amount has been cleared now.

According to the report, the shortfall will force states to borrow at least Rs 2.2 lakh crore more from the market, which means that they will have to utilise as much as 90 per cent of their enhanced borrowing limits in FY22.  It has estimated the states' projected revenues at Rs 8.7 lakh crore next fiscal, which is 14 per cent higher than Rs 7.7 lakh crore in FY21.

The agency said the numbers are based on an estimate by the agency for all the 31 states and the Union Territories on a base case scenario of 23 per cent growth in GST collection by the states, which is in line with the Central estimate as well. Based on this, it expects the SGST collections by all the 31 states and UTs at Rs 5.7 lakh crore in FY22. The gap between the estimated projected revenue and SGST collections is pegged at Rs 3 lakh crore.

The CNX Nifty traded in a range of 15,051.60 and 14,890.65. There were 20 stocks advancing against 29 stock declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Asian Paints up by 4.70%, Dr. Reddys Lab up by 2.58%, Hindustan Unilever up by 1.59%, HCL Technologies up by 1.58% and TCS up by 1.41%. On the flip side, Cipla down by 1.57%, Tata Steel down by 1.55%, ICICI Bank down by 1.47%, SBI down by 1.30% and BPCL down by 1.21% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 34.25 points or 0.51% to 6,783.95, France’s CAC rose 7.01 points or 0.12% to 6,042.98 and Germany’s DAX was up by 81.47 points or 0.56% to 14,542.89.

Asian markets finished mostly in green on Tuesday bolstered by the optimism about potential stimulus driven global economic recovery from the damage caused by the covid pandemics .The investors are widely expecting that the Federal Reserve will tackle the inflation concerns and rising bond yields by taking necessary measures at its meeting this week. The Central Bank is expected to give updated economic and interest rate projections along side its policy decisions. China's Shanghai rebounded with the advancing of stocks in consumer staples and financial sectors. Japan is also awaiting decisions from the Bank of Japan a day later.

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