Equity markets pare off small portion of gains; Kotak Mahindra Bank Q1 earning disappoints

Indian equity markets have given up some part of their gains after Private sector lender, Kotak Mahindra Bank, posted less than expected 6.5% growth in consolidated net profit for the quarter ended June 2012at Rs 443.6 crore as against Rs 416 crore in the same period a year ago, which sent the stock tumbling down over 1%. Additionally, weakness of money markets also got transpired into the Indian equity markets, which triggered slender profit booking among frontline indices, even broader space surrendered smaller portion of their gains. However, more or less, the indices, were still trading in fine fettle, 30 share barometer index of Bombay Stock Exchange (BSE)-Sensex- gaining over 75 points was trading above the 17250 level, however 50 share index of National Stock Exchange (NSE)-Nifty-gave way its 5250 bastion.

Positive global leads also attributed as a reason enough for the uptake of the bourses. European counterparts got off to a positive start, following an upbeat session on Wall Street which saw U.S. stocks erase all of July's losses. Meanwhile, Asian pacific shares too were trading in rapture, after strong corporate profits from U.S. bellwethers allayed fears of a slowdown in earnings, particularly for the beleaguered tech sector.

Back home, stocks from Information Technology, Consumer Durable and Realty counters, mainly sustained the uptrend, while stocks from Fast Moving Consumer goods, were the only pocket of weakness. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1509:1021, while 117 shares remained unchanged.

The BSE Sensex is currently trading at 17,275.24 up  by 90.23 points or 0.53% after trading as high as 17,317.56 and as low as 17,257.19. There were 21 stocks advancing against 9 declines on the index.

The broader indices too pared some gains; the BSE Mid cap index was up by 0.47%, while Small cap index gained 0.65%.

The top gaining sectoral indices on the BSE were, IT up by 1.62%, CD up by 1.46%, Realty up by 1.21%, Capital Goods up by 1.20% and Power up by 1.05%, while FMCG down by 0.11% and Auto down by 0.09% were the only loser on the BSE.

Infosys up by 2.88%, BHEL up by 2.37%, Tata Motors up by 1.99%, Tata Power up by 1.98% and Hindalco Industries up by 1.91% were major gainers on the Sensex, while Maruti Suzuki down by 7.45%, Bharti Airtel by 1.93%, Hero MotoCorp up by 0.50%, ITC down by 0.49% and Dr Reddys Lab down by 0.45% were major losers on the index.

Meanwhile, the much awaited meet of the Empowered Group of Ministers (EGoM) on Telecom for the contentious issue of a reserve price for the re-auction of 2G spectrum, was yet again deferred to Friday. Crucial aspects like pricing of spectrum, one-time fee, roll-out obligations, terms of payment and the timeline for selecting the auctioneer, were expected to be taken on board for discussion on Tuesday, by the EGoM under the chairmanship of Union Home Minister P Chidambaram who was asked to lead the EGoM on spectrum auction after Agriculture Minister Sharad Pawar declined the job, apprehending controversy.

However, the ministerial panel, staying mum on rest of the issues, did manage to pencil down stricter roll-out obligations for successful bidders. Besides, the ministerial panel also mandated Department of Telecommunications (DoT) to sketch a fresh matrix on the impact of the reserve price chosen on government revenue and operators’ rates.

As per the new roll-out obligation, successful bidders will have to cover 10% of DHQs (district headquarters) by the third year, 20% of DHQs in the fourth year and 30% of DHQs by the fifth year. However, earlier the Telecom Regulatory Authority of India (Trai) had recommended the operators that win spectrum would have to cover 50% of villages, in three years, and 100% coverage of the country in four years.

With the industry crying foul, the Trai has 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.

The S&P CNX Nifty is currently trading at 5,246.40, up  by 30.10 points or 0.58% after trading as high as 5,257.75 and as low as 5,238.00. There were 35 stocks advancing against 14 declines on the index, while 1 stock remained unchanged.

The top gainers on the Nifty were BPCL by 3.15%, Cairn India up by 2.83%, Infosys up by 2.64%, BHEL up by 2.62% and IDFC was up by 2.27%. On the flip side, Maruti down by 7.49%, Bank of Baroda down by 3.23%, Bharti Airtel down by 2.08%, Kotak Bank down by 1.58% and PNB down by 1.24% were the major losers on the index.

All the Asian equity indices were trading in the green, with an exception of Jakarta Composite, which traded was flat with negative bias; KLSE Composite was up by 0.09%  Hang Seng index surged 1.52%, Nikkei 225 added 0.79%, Kospi Composite Index garnered 1.56%, Straits Times rose 0.22%, Taiwan Weighted expanded by 1.41% ,Shanghai Composite gained 0.77%.

European markets for second consecutive session got off to a positive start; Germany’s DAX was trading up by 0.37%, UK’s FTSE rose 0.11% and France’s CAC 40 gained 0.29%.