Barometer gauges gyrate listlessly in the red zone

Lacking any significant upside triggers, benchmark equity indices are listlessly gyrating in the negative terrain, as “wait and watch” method adopted by the market-men ahead of Q1 earnings of Information Technology major, Infosys and Tata Consultancy Service (TCS), on July 12, is keeping the market jittery. However, investor’s will also be eyeing the earnings of financial services giant HDFC, today, to embark upon some further cues on first quarterly earnings season. Negative opening of European counterparts, too is keeping the trend bearish for Indian equity markets, which made spectacular rally in the previous session. 30 scrip sensitive index of Bombay Stock Exchange (BSE)-Sensex, after offloading over 50 points, is holding onto its 17550 bastion. Similarly, the 50 share barometer index of National Stock Exchange-Nifty-losing over 15 points, is hovering sub 5350 mark. The broader indices, however, are managing to hold their neck above the water, with Smallcap and Midcap indices adding over 0.15%.

Lackluster updates from a number of U.S. companies on the upcoming earnings season and lingering uncertainty on political progress in tackling the euro zone crisis have prompted a red start of European Indices.  Meanwhile, Asian pacific indices have mostly turned positive in light of mounting concern the slowing global economy will cast its shadow on the earnings growth . The US future indices, however, were pointing towards a positive start of Wall Street.

Closer home, stocks from Consumer Durable, Information Technology and Bankex counters were limiting the pessimism of the bourses, while stocks from rate sensitive, Realty, Auto and Defensive Fast Moving Consumer Goods, were depicting the underlying weakness of the bourses. Positive updates on Monsoon, too was seen as limiting gains, as Indian Meteorological Department reported that rainfall deficit over the past week dwindled to 23%, a sign that monsoon has arrived at most parts of the country. Information Technology stocks are showcasing resilience, stood tall on account of gigantic gains of Infosys, which is expected to post strong Q1 numbers thanks to the depreciating rupee against US dollar. Meanwhile, upbeat result reported by IndusInd Bank has been driving BSE’s Bankex pivotal. The overall market breadth on BSE is in the favour of declines which thrashed advances in the ratio of 1217:1257, while 135 shares remained unchanged

The BSE Sensex, after trading as high as 17,582.99 and as low as 17,516.12, is currently trading at 17,551.18, down by 67.17 points or 0.38%. There were 10 stocks advancing against 20 declines on the index.

The broader indices, however, managed to keep their head above the water; the BSE Mid cap and Small cap indices were trading higher by 0.34% and 0.165 respectively.

The top gainers on the BSE sectoral space were, CD up by 0.77%, Information Technology up by 0.51%, TECk up by 0.28%, Bankex up by 0.25% and CG up by 0.07%. While, Realty down by 1%, FMCG down by 0.97%,  Oil & Gas down by 0.84%, Auto down by 0.73% and Metal down by 0.50% were the top losers on the index.

Infosys up by 1.05%, SBI up by 0.80%, HDFC Bank up by 0.61%, L&T up by 0.44% and TCS up by 0.36% were the major gainers on the Sensex, while Wipro down by 2.25%, Hindalco Industries down by 2.00%, Tata Motors down by 1.54%, Reliance Industries down by 1.45% and Tata Power down by 1.43% were the major losers in the index.

Meanwhile, the much deferred Empowered Group of Ministers (EGoM) meet on Telecom will be held on July 12 to decide on the controversial issue of spectrum pricing. Crucial aspects like pricing of spectrum, one-time fee, roll-out obligations, terms of payment and the timeline for selecting the auctioneer, will be taken on board for discussion, by the EGoM under the chairmanship of Union Home Minister P Chidambaram who was asked to head the EGoM on spectrum auction after Agriculture Minister Sharad Pawar declined the job, apprehending controversy.

With the industry crying foul, the Telecom Regulatory Authority of India (TRAI), the sector regulator, proposed a near 10-fold rise in the auction’s starting price compared to what carriers paid in 2008. The regulator recommended 2G spectrum reserve price at Rs 3,622 crore per unit of spectrum in the 1800 MHz band, which translates to an amount of over Rs 18,000 crore for pan-India license, i.e. 13x of current base price of 2G and equivalent to 3G spectrum cost, where radio airwaves were vacated following the Supreme Court’s verdict on February 2 cancelling all the 122 spectrum licenses allotted in 2008 during the tenure of the former telecom minister A Raja. 

Importantly, the issue on the one-time fee to be paid by the incumbent players, which does not augurs well with the Finance Ministry and the Planning Commission, too would be discussed upon.  Towards this development, Department of Telecom (DoT) in a move aimed at making the playing field level, wants to charge all operators a fee for the entire spectrum they hold.

Meanwhile, the EGoM is also expected to approve a new deadline for the auction process as well. Making the deadline date of August 31 set by Supreme Court, unattainable, the Department of Telecom (DoT) for the second time extended the timeline for receiving bids from companies for the auctioneer’s job to July 20 instead of the earlier date of July 5, which in turn implies that the all important information memorandum detailing the auction guidelines will now only be issued on August 22 instead of August 6, 2012. 

The S&P CNX Nifty, after trading as high as 5,336.45 and as low as 5,314.25, is currently trading at 5327.60, down by 17.75 points or 0.33%. There were 20 stocks advancing against 30 declines on the index.

The top gainers on the Nifty were BPCL up by 2.33%, Kotak Bank up by 2.09%, Power Grid by 1.19%, Infosys up by 1.05%, and ACC up by 0.93%. On the flip side, Wipro down by 2.34%, Hindalco down by 2.08%, Tata Motors down by 1.72%, ITC down by 1.53% and Reliance Industries down by 1.38% and Tata power down by 1.33% was the major losers on the index.

Asian equity indices were mostly trading in green; Shanghai Composite added 0.29%, Strait Times added 0.79%, Jakarta Composite rose 0.09%, KLSE Composite gained 0.47% and Taiwan Weighted was up 0.09%. On the flip side, Hang Seng and Nikkei 225 index declined by 0.08%, Kospi Composite Index lost 0.17%.

European markets made a red start; CAC 40 lost 0.58%, DAX slipped by 0.29% and FTSE100 surrendered 0.49%.