Post session - Quick review

After taking a breather in the last session, Indian equity markets again resumed their southbound journey on Wednesday. However, losses incurred in this session, could have been worse, had the bourses not recuperated some part of the ground by the end of the trade. Bourses, after diving deep into the sea of red, recovered from intra-day’s low by close, as some support emerged at lower levels, even bottom fishing aided the benchmarks in covering up some loss. Also, losses at Dalal Street, to some extent remained capped on account of robust gains witnessed in HCL Technologies, which shooting up over 6%, spelled optimism in the entire IT space.30 share barometer index, Sensex, surrendered over 50 points, to shut shop above the 16800 level. The index once dipped sub 16750 level.  The widely followed index, Nifty, also consolidating around its previous closing levels, ended above the 5100 bastion. The penultimate session of July series Futures and Options expiry, saw markets volumes recording second highest turnover at Rs 3 lac crore. Meanwhile, broader indices incurred greater losses. Broader losses of the bourses was also capped on account of brief gains in European shares after a ECB policymaker sees arguments to give a banking license to the region's permanent rescue fund, which allows it to borrow unrestricted funds from the central bank. However, Asian pacific shares ended down in dumps as spiraling borrowing costs deepened worries that Spain might need a bailout, while Greece appeared unlikely to meet terms conditional to its aid package.

Back home, faded diesel price hike hopes, could be blamed for the chaos of equity markets, as investors digested few reports which stated lack of policy reforms before vice presidential reforms on August 7. Sector wise, stocks from Metal, Consumer Durable and Power counters were the ones that emerged top laggard, while stocks from Fast Moving Consumer Goods, Information Technology and Health Care counters, restricted the downfall of the bourses.

On the result front, there were more hits than misses; with Tyre manufacturer MRF surging over 2% on reporting four-fold rise in net profit at Rs 144.56 crore for the quarter ended June 30, 2012 as compared to Rs 31.95 crore for the same quarter in the previous year. Meanwhile, Private sector lender Yes Bank too rallied over a percentage, on beating the street forecast by reporting 34% surge in its first quarter (April-June) net profit to Rs 290 crore, aided by a whopping rise in the other income that upped 74% to Rs 288 crore during the three-month period. Additionally, Public sector Vijaya Bank too gained marginally after registered a jump of 54.20% in its net profit at Rs 111.36 crore for the quarter under review as compared to Rs 72.22 crore for the same quarter in the previous year. On the flip side, Sesa Goa plunged by over a percent on reporting drop of 67% in its Q3FY12 net profit at Rs 227.66 crore for the quarter under review as compared to Rs 672.98 crore for the same quarter in the previous year. However, state-owned central transmission utility Power Grid Corporation of India (PGCIL) ended flat despite missing its street estimated by reporting 23.37% rise in net profit at Rs 870 crore for Q1FY13. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1090:1694 while 116 scrips remained unchanged. (Provisional)

The BSE Sensex lost 74.03 points or 0.44% and settled at 16,844.05. The index touched a high and a low of 16,899.01 and 16,736.60 respectively. 9 stocks were seen advancing against 21 declining ones on the index (Provisional)

The BSE Mid-cap index lost 0.80% while Small-cap index was down by 0.85%. (Provisional)

On the BSE Sectoral front, Health Care up 0.33%, FMCG up 0.31% and IT up 0.23% were the only gainers, while Metal down 2.02%, Consumer Durable down 1.75%, Power down 1.42%, PSU down 0.94% and Capital Goods down 0.93% were the top losers.

The top gainers on the Sensex were ITC up 1.56%, Sun Pharma up 1.27%, Cipla up 0.60%, GAIL India up 0.53% and Bajaj Auto up 0.45% while, Jindal Steel down 4.16%, Tata Steel down 2.57%, Hindalco Industries down 2.35%, HUL down 2.32% and Bharti Airtel down 2.24% were the top losers in the index. (Provisional)

The Empowered Group of Ministers (EGoM) on telecom has yet again deferred a decision on one-time fees payable by incumbent telecom operators, on July 24, until the observations of the Supreme Court on the presidential reference are secured. This is for the second time in less than a week that the EGoM, headed by Home Minister P Chidambaram has deferred taking a decision on the matter.

The panel, which last met on July 20, recommended Rs 14,000 crore and Rs 15,000 crore reserve prices for 5 MHz pan India spectrum in 1,800 MHz band. Meanwhile, TRAI recommended Rs 18,110 crore reserve price for the same spectrum. The EGoM suggested two options for spectrum usage charge, a flat 5 per cent of revenue or retaining the status quo of 3-8 per cent, depending on the amount of spectrum held. 

Besides that, it also favoured deferred payment method for 2G spectrum, in line with the recommendations of the Telecom Regulatory Authority of India (TRAI). Under this process, telecom companies will have to pay a certain amount of money up front for the spectrum, and the rest over a period of time. However, they will also have to pay interest on the deferred portion of the payment.

The ministerial panel even managed to pencil down stricter roll-out obligations for successful bidders and 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 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.

India VIX, a gauge for market’s short term expectation of volatility lost 1.29% at 16.75 from its previous close of 16.97 on Tuesday. (Provisional)

The S&P CNX Nifty lost 18.95 points or 0.37% to settle at 5,109.25. The index touched high and low of 5,121.60 and 5,076.60 respectively. 15 stocks advanced against 35 declining ones on the index. (Provisional)

The top gainers on the Nifty were HCL Technologies up 6.70%, Ambuja Cement up 4.07%, DLF up 1.69%, ITC up 1.60% and Sun Pharma up 1.41%. On the other hand, Jindal Steel down 4.54%, SAIL down 3.66%, Reliance Infrastructure down 2.99%, Tata Steel down 2.72% and Bharti Airtel down 2.61% were the top losers. (Provisional)

The European markets were trading in green, with France's CAC 40 up 0.60%, Germany's DAX up 0.12% and Britain’s FTSE 100 up 0.11%.