Benchmarks recover some early losses; still continue to trade in red

Though, recovering from day’s low, benchmark equity indices were still trading below the neutral line as investors put a cautious foot forward over the Greek referendum. Greece public's decision to cast a majority of 'no' vote defying its creditors' condition to undertake massive spending cuts for want of more financial packages raises fears that a 'contagion' effect could spread to other debt-laden European countries, which may further worsen financial market condition going ahead. Besides, the weakening rupee which slipped from two-month high, also weighed on sentiments. However, losses remained capped with Reserve Bank Governor Raghuram Rajan's comments that India's exposure to Greece is limited. Some support also came with Finance Minister Arun Jaitley’s statement that policy reforms and 8-10 per cent economic growth are a must to eliminate poverty.

On the global front, most of the Asian markets fell sharply after voters in Greece rejected austerity plans demanded by international creditors, casting doubt on the country's future in the euro zone. However, China's stock market tried to buck the trend following a salvo of rapid-fire support measures from Beijing over the weekend. Back home, after four days of rise, Indian rupee turned weak and declined by 18 paise to 63.62 against the US currency in early trade due to the dollar’s gain against other currencies overseas.

Back on street, except Oil & Gas index, all the other sectoral indices were trading negative. Heavy selling pressure was seen in Banking, Metal, Consumer Durables and Infrastructure stocks. In scrip specific development, shares of VA Tech Wabag have surged after the company along with their joint venture (JV) partner, Belhasa Projects, won an EPC order in the water and waste water treatment space in the Kingdom of Bahrain. Furthermore, Kotak Mahindra Bank rose after the Foreign Investment Promotion Board (FIPB) cleared the bank’s proposal to raise foreign investment limit in the lender to 55%.

The market breadth on BSE was negative, out of 2202 stocks traded, 981 stocks advanced, while 1139 stocks declined on the BSE.

The BSE Sensex is currently trading at 27863.93, down by 228.86 points or 0.81% after trading in a range of 27774.80 and 27946.68. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.29%, while Small cap index up by 0.03%.

The only gaining sectoral index on the BSE was Oil & Gas up by 0.14%, while Bankex down by 1.07%, Metal down by 1.05%, Consumer Durables down by 0.98%, Infrastructure down by 0.84% and Capital Goods down by 0.83% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddys Lab up by 2.42%, Cipla up by 1.88%, Coal India up by 0.85%, Bajaj Auto up by 0.50% and Hero MotoCorp up by 0.01%. On the flip side, Vedanta down by 3.90%, ICICI Bank down by 2.02%, Tata Steel down by 1.93%, Hindalco down by 1.90% and Tata Motors down by 1.79% were the top losers.

Meanwhile, Union Cabinet is likely to approve the long-awaited guidelines on spectrum trading and sharing by the end of the month that will pave way for merger and acquisitions in the telecom sector. Telecom Secretary Rakesh Garg has stated that the spectrum sharing and trading guidelines have almost been finalized and Cabinet note has been circulated. He also highlighted that Spectrum sharing guidelines will allow telecom companies to share their un-utilized airwaves with other service providers in the same telecom circle.

The spectrum trading and sharing guidelines were approved by the Telecom Commission in early June, awaiting notification from the cabinet. Though, technically the matter does not require the Cabinet’s nod since the Telecom Commission itself is an inter-ministerial body, the latter still has decided to seek its approval.

Earlier, in April, the Department of Telecom (DoT) had sought clarifications from the Telecom Regulatory Authority of India (TRAI) about spectrum-sharing and trading guidelines. TRAI had reiterated its stand on most of the recommendations on spectrum-sharing and trading guidelines, while clarifying that radio waves acquired through trading can also be shared. The regulator also stood by recommendations of allowing operators to share all spectrum including 3G. It also recommended allowing the trading of spectrum.

Up to now, the government only is allowed to allocate spectrum to telecom firms through auctions. Once trading is allowed, it is expected to increase efficient use of radiowaves by enabling telecom operators, who have a lower subscriber base or unutilized spectrum, to trade in it. Once into effect, trading would be beneficial for the bigger operators as it would lead to targeted merger and acquisitions.

The CNX Nifty is currently trading at 8424.40, down by 60.50 points or 0.71% after trading in a range of 8386.15 and 8443.80. There were 15 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were BPCL up by 2.79%, Dr. Reddys Lab up by 2.29%, Cipla up by 1.84%, Coal India up by 0.79% and Kotak Mahindra Bank up by 0.78%. On the flip side, Vedanta down by 3.87%, NMDC down by 2.25%, Cairn India down by 2.05%, ICICI Bank down by 2.00% and Hindalco down by 1.99% were the top losers.

Asian markets were mostly trading in green; Hang Seng was down by 3.18%, Nikkei 225 down by 2.42%, Taiwan Weighted down by 0.87%, Jakarta Composite down by 1.20%, KOSPI Index down by 2.11%, Straits Times down by 0.82% and FTSE Bursa Malaysia KLCI down by 1.3%. On the flip side, Shanghai Composite was up by 2.16%.