Indian markets make somber start amid weakness in Asian peers

Prolonging their yesterday’s downfall, the Indian equity markets have made a weak start on the back of weak trend in other Asian markets. All the Asian peers barring Nikkei were trading in the negative terrain at this point of time while, the US markets made a flat closing with Dow Jones Industrial Average remaining slightly lower on Tuesday, indicating somber investors’ sentiment. Back home, market extended their losses after a flat-to-cautious start in the absence of valuable buying activity by foreign funds as they were in the holiday mood ahead of the year end. On the sectoral front software, technology and power remained the only gainers while, banking, capital goods and metal witnessed the most selling pressure, dragging down the Sensex. Interest rate sensitive banking space extended Tuesday’s losses on fears of increase in bad loans in a slowing economy. Moreover, the broader indices too were struggling to get some traction while, the market breadth on the BSE was negative; there were 572 shares on the gaining side against 815 shares on the losing side while 69 shares remained unchanged. The market may remain volatile in the immediate future as traders roll over positions in futures & options (F&O) segment from the near-month December 2011 series to January 2012 series.

The BSE Sensex opened at 15,854.36; about 19 points lower compared to its previous closing of 15,873.95, and has touched a high and a low of 15,887.80 and 15,790.73 respectively.

The index is currently trading at 15,800.80 down by 73.15 points or 0.46%. There were 10 stocks advancing against 20 declines on the index.

The overall market breadth has made a negative start with 39.29% stocks advancing against 55.98% declines. The broader indices too were trading in the red; the BSE Mid cap and Small cap indices were down by 0.53% and 0.29% respectively.

The top gaining sectoral indices on the BSE were, IT up by 0.09%, TECk up by 0.03% and Power up by 0.02%. While, Bankex down by 1.28%, CG down by 1.27%, Metal down by 1.12%, Realty down by 1.06% and CD down by 0.89% were the top losers on the index.

The top gainers on the Sensex were Tata Power up by 2.71%, NTPC up by 0.54%, Hero MotoCorp up by 0.42%, TCS up by 0.28% and Infosys up by 0.15%.

On the flip side, DLF was down by 1.96%, ICICI Bank was down by 1.85%, Jindal Steel was down by 1.81%, L&T was down by 1.66% and SBI was down by 1.66% were the top losers on the Sensex.

Meanwhile, in a move that could lead to consolidation in the Indian telecom sector, the Telecom Commission has approved telecom regulator Trai's proposal on rules for mergers and acquisitions in the sector. Telecom Secretary R. Chandrashekhar opined that the Telecom Commission is also not opposed to the Trai’s recommendation to charge a one-time fee on operators for holding spectrum beyond 6.2 mega hertz.

Chandrashekhar further elucidated that the commission has accepted the regulator’s proposal that mergers and acquisitions will get automatic clearance if the combined market share of the new entity is less than 35% and spectrum holding is less than 25%. Whereas, if the market share of the combined entity is more than 35% but less than 60%, the regulator will examine the case to avoid monopoly in the market.

The move may spur consolidation in the 14-player telecom industry, out of which a number of new players are yet to make a mark even as increasing number of people in the country start using mobile phones every month. The commission also favored a proposal to levy within the next two years a uniform license fee of 8% on companies that offer various telecom services, against 6%-10% previously impose depending on factors such as service and region, said the Telecom Secretary.

Telecom tower companies and internet service providers will also have to share 8% of their annual revenues from now on. Until now, the telecom tower companies and internet service providers were not obliged to pay any annual licence fee. After finalizing all other decisions within a week’s time, the commission is likely to forward the decisions to Telecom Minister Kapil Sibal and subsequently seek Cabinet's nod to implement them.

The S&P CNX Nifty opened at 4,756.20; about 6 points higher compared to its previous closing of 4,750.50, and has touched a high and a low of 4,756.20 and 4,713.85 respectively.

The index is currently trading at 4,713.90, lower by 36.60 points or 0.77%. There were 10 stocks advancing against 40 declines on the index.

The top gainers of the Nifty were Tata Power up by 2.15%, Siemens up by 0.63%, RPower up by 0.62%, NTPC up by 0.35% and Ambuja Cement up by 0.31%.

On the flip side, Axis Bank down by 2.37%, IDFC down by 2.32%, ICICI Bank down by 2.18%, DLF down by 2.01% and L&T down by 1.99%, were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite was down 14.23 points or 0.66% to 2,151.97, Hang Seng was down 125.50 points or 0.67% to 18,503.67, Jakarta Composite was down 18.91 points or 0.50% to 3,770.51, Straits Times was down 7.06 points or 0.26% to 2,666.56, Seoul Composite was down 22.48 points or 1.22% to 1,819.54 and Taiwan Weighted was down by 47.62 points or 0.67% to 7,037.41.

On the flip side, Nikkei 225 was up by 3.09 points or 0.04% to 8,443.65.