Benchmarks continue to trade in red in late morning session

Indian benchmark indices continued to trade in red in the late morning session as funds and retail investors indulged in cutting their bets, tracking a falling trend in global markets as weak Chinese manufacturing data and a downgrade in the Eurozone growth forecast revived worries about slowing growth.  Besides, depreciation in rupee value against the dollar also weighed on the sentiment. Indian rupee weakened 21 paise to 66.63 against the US dollar in early trade on increased demand for the American currency from importers and banks. Investors remained cautious with private report that India is likely to pursue a mildly expansionary fiscal policy over the next 12 months largely due to the one off impact of government employee wage hike. The government has budgeted for around 60% of the incremental expenditure on salaries, and thus there is a risk that if the government takes up full-scale implementation of the pay commission recommendation, it could compromise on the fiscal deficit reduction target. However, losses remained capped with the report that Indian companies will likely resume growth in the coming quarters helped by lower debt, positive cash flows and a better economic environment signalling the end of the corporate debt crisis in the country. Moreover, the International Monetary Fund has retained its growth forecast for India this year at 7.5 per cent, largely driven by private consumption even as weak exports and sluggish credit growth weigh on the economy.

On the global front, Asian stocks extended their losses for the sixth consecutive day on Wednesday as anxiety over the health of the global economy unnerved investors. Among the major indices, Taiwan Weighted and Hang Seng were down over a percent each while China's Shanghai Composite was trading flat with negative bias. Further, US stocks ended lower on Tuesday after weak manufacturing data from China, the world's second largest economy, fuelled concerns over global growth while drop in crude oil prices also weighed on investor sentiment. Back on street, all sectoral indices on the BSE were in the red with Metal index emerging as the top loser down by over two and half percent followed by Auto, PSU and TECK indices among others. In scrip specific development, Shares of BASF India have surged after the company reported a net profit at Rs 77 crore for the fourth quarter ended March 2016 (Q4), on back of strong operational performance and one-time gain due to profit on sale of its non-core assets. On the other hand, Alstom T&D India has declined after the company has posted a fall of 44.72% in its net profit at Rs 29.87 crore for the quarter ended March 31, 2016 as compared to Rs 54.03 crore for the same quarter in the previous year.

The market breadth on BSE was negative, out of 2067 stocks traded, 656 stocks advanced, while 1311 stocks declined on the BSE. 

The BSE Sensex is currently trading at 25142.18, down by 87.52 points or 0.35% after trading in a range of 25210.87 and 25096.19. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.48%, while Small cap index down by 0.40%.

The top losing sectoral indices on the BSE were Metal down by 1.88%, Auto down by 0.88%, TECK down by 0.62%, IT down by 0.49% and PSU down by 0.48%, while there were no losing indices on BSE sectoral front.

The top gainers on the Sensex were HDFC up by 2.71%, NTPC up by 1.54%, HDFC Bank up by 0.88%, Hero MotoCorp up by 0.88% and ITC up by 0.35%. On the flip side, Adani Ports &Special down by 9.33%, Tata Motors down by 4.32%, Tata Steel down by 3.54%, Coal India down by 2.07% and ICICI Bank down by 1.65% were the top losers.

Meanwhile, the government has targeted revenue of Rs 64,580.92 crore in the current financial year 2016-17 from spectrum auction proceeds. The standing Committee on Information Technology in its report has said that for the year 2016-17, the Ministry of Finance has set the target of Rs 98,994.93 crore, which is inclusive of 64,580.92 crore as spectrum auction revenue.

Recently, the inter-ministerial panel Telecom Commission chaired by telecom secretary JS Deepak  has agreed to base prices of various frequency bands recommended by the regulator Telecom Regulatory Authority of India (Trai) for the auction to be held in July this year. At the Trai-suggested base prices, auction of all spectrum would fetch Rs 5.36 lakh crore to the exchequer. The frequencies put on the block include spectrum in premium 700 Mhz band (4G and advance), 800 Mhz (2G,4G), 900  Mhz (3G, 4G), 1800 Mhz (2G,4G), 2100 Mhz (3G), 2300 Mhz (4G) and 2500 Mhz (4G). The total potential revenue of Rs 5.36 lakh crore from the spectrum sale is more than double of telecom services industry gross revenue of Rs 2.54 lakh crore reported in 2014-15 financial year.

Moreover, the inter-ministerial panel has favoured that companies winning spectrum in higher frequency bands - above 1Ghz like 1800 Mhz, 2100 Mhz, 2300 Mhz -- should make 50 per cent upfront payment and rest in 10 years after a 2-year moratorium. Besides, for spectrum below 1Ghz band such as 700 Mhz, 800 Mhz, 900 Mhz, companies will require to pay 25 per cent upfront and rest in 10 years after a 2-year moratorium.

As per the rule approved by the inter-ministerial panel, a company interested in buying spectrum in 700 Mhz band will need to shell out a minimum of Rs 57,425 crore for a block of 5Mhz on pan-India basis. This band alone has the potential to fetch bids of over Rs 4 lakh crore.  If all spectrum in 700 Mhz band gets sold at even Trai recommended base price, then successful bidder will need to pay over Rs 25,000 crore after auction. Leading operators have requested to defer sale of 700 MHz spectrum, as the ecosystem for providing services in this band was not developed and sale would lead to underutilisation of the spectrum for several years and block industry's fund.

The CNX Nifty is currently trading at 7716.40, down by 30.60 points or 0.39% after trading in a range of 7703.85 and 7738.20. There were 12 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were HDFC up by 2.29%, NTPC up by 1.54%, Kotak Mahindra Bank up by 1.15%, Aurobindo Pharma up by 0.98% and HDFC Bank up by 0.86%. On the flip side, Adani Ports &Special down by 9.34%, Tata Motors down by 4.61%, Tata Motors - DVR down by 4.56%, Hindalco down by 3.97% and Tata Steel down by 3.83% were the top losers.

Asian markets were trading in red, Hang Seng was down by 1.09%, Taiwan Weighted down by 1.56%, Jakarta Composite down by 0.86%, KOSPI Index down by 0.74%, Shanghai Composite down by 0.23% and FTSE Bursa Malaysia KLCI down by 0.74%.The Japanese market is closed until Friday for the Golden Week holidays.