Weak start of European counterparts drags benchmarks off from intra-day’s high

A weak start of European counterparts has mainly dragged benchmark equity indices from their intra-day high points, with investors’ reluctance to open fresh position in absence of positive catalyst, further adding to the downside chance of Indian equity markets. However, renewed buying activity seen after a day’s holiday has mainly sustained the uptrend at Dalal Street, which at this point of time seem to be consolidation mode, with 30 share index, Sensex, gyrating around the 18800 level and 50 share index wandering near the 5700  crucial mark. Meanwhile, profit -booking is also being witnessed in broader space, as both Mid-cap and Smallcap indices have pared gains in sync with front line indices.

On the global front, European markets, adding to the previous session’s losses, declined after Spanish Prime Minister Mariano Rajoy denied immediate plans to ask for a bailout and also after report showed China’s services industry expanded at the weakest pace in at least 19 months.

Closer home, sector-specific action continued to hog limelight; with Oil & Gas,  Health Care and  Capital Goods  counters emerging to be shining stars on one side and stocks from Information Technology,  Auto and Technology counters continuing to be laggards on the other side. Appreciation of rupee to five months high level has mainly dragged the IT shares lowers, as these firms derive lion share of their revenue in American currency. On the flip side, select cement stocks, viz, Ambuja Cement, ACC, extended a recent rally on continued hopes for more infrastructure-related initiatives from the government and hopes for increased construction activity after the end of the monsoon period. However, Telecom stocks, baring Bharti Airtel, were trading in red, ahead of outcome of the meeting of Empowered Group of Ministers on Telecom, headed by Finance Minister P Chidambaram, to decide on the issue of one-time fee on spectrum held by existing telecom operators. The overall market breadth on BSE, however, still remains in the favour of advances which are outnumbering declines in the ratio of 1639:1016, while 135 shares remained unchanged.

The BSE Sensex is currently trading at 18861.11, up by 37.20 points or 0.20% after trading in a range of 18905.62 and 18831.94. There were 18 stocks advancing against 12 declines on the index.

The broader indices too pared some gains in line with the frontline indices; the BSE Mid cap and Small cap indices were trading up by 0.38% and 0.70% respectively.

On the BSE sectoral space, Oil &Gas up by 0.93%, HC up by 0.79%, CG up by 0.47%, PSU up by 0.46% and FMCG up by 0.43% were top gainers. While, IT down by 0.36%, Auto down by 0.25%, TECk down by 0.22%, Bankex down by 0.19% and CD down by 0.13% were the top losers on the sectoral space.

The top gainers on the Sensex were Dr Reddys Lab up by 3.02%, Hindustan Unilever up by 1.77%, Reliance up by 1.63%, Coal India up by 1.44% and Sun Pharma up by 1.13%. On the other hand, Jindal Steel down by 4.10%, Infosys down by 1.50%, Bajaj Auto down by 1.37%, Hero Moto Corp down by 1.31% and ITC down by 1.01% were top losers on the Sensex.

Meanwhile, the Empowered Group of Ministers (EGoM) on telecom headed by Finance Minister P Chidambaram is likely to meet today and take a decision on the one-time spectrum fee issue. It has been reported that the issue of re-farming of radio waves will also come up for discussion at the EGoM.

While, the incumbent operators had been allocated spectrum beyond the contractual limit of 6.2 MHz without any additional charges by the government, much of the spectrum to be vacated by the telecom companies that lost their licences following a Supreme Court verdict will be reserved for re-farming radio waves in the 900 Mhz band. The Department of Telecommunication (DoT) intends to take back the spectrum allocated to telcos in this band and replace it with airwaves in the 1,800 Mhz band at the time of renewal of licences, mainly, to auction it again.

The EGoM will also be discussing the issue of including additional blocks in its notice inviting application (NIA). Earlier, EGoM had decided to provide 8 blocks of 1.25 Mhz each for auction in this band and three additional blocks when required in some circles, after reserving spectrum for re-farming or reallocating them to companies at the time of their licences renewal. However, DoT in its NIA on September 28 has increased the number of spectrum blocks in 1800 Mhz band for auctions by three, except in Delhi and Mumbai circles

The S&P CNX Nifty is currently trading at 5,729.30, up by 10.50 points or 0.18% after trading in a range of 5,743.25 and 5,722.85. There were 27 stocks advancing against 23 declines on the index.

The top gainers of the Nifty were IDFC up by 2.91%, Dr Reddy up by 2.85%, Siemens up by 2.75%, Ambuja Cement was up by 1.91% and Hindustan Unilever up by 1.87%. While, Jindal Steel down by 4.47%, Infosys down by 1.51%, Hero MotoCorp down by 1.46%, Bajaj Auto down by 1.29% and Axis Bank down by 1.06% were top losers on the index.

All the Asian markets were reeling under pressure, Jakarta Composite declined by 0.16%, KLSE Composite skid 0.43%, Nikkei 225 lost 0.45%, Straits Times descended by 0.29%, Taiwan Weighted slipped by 0.44% and Hang Seng surrendered 0.02%. Meanwhile, markets in China and Korea are closed today for holidays.

European markets got off to a weak start, with CAC 40 trading lower by 0.73%, FTSE 100 declining  0.31% and  DAX losing 0.28%.