Sensex, Nifty continues negative trade

Following a positive opening, Indian equity markets slipped into negative territory amid selling pressure after earlier session’s excellent rally. The Sensex declined 124 points, while Nifty fell by 38.15 points in the late morning session. In currency markets, rupee is trading with marginal gains against dollar amid government’s victory over crucial vote on foreign direct investment in multiband retail on Wednesday. Investors are now worried about the vote in the Rajya Sabha on Friday, which will be another key factor for market movement. On sectoral front, consumer durables and auto stocks were trading in green and all other sectors were trading in red. Moreover, tech sector, which took a beating even in the earlier session, reacted to Cognizant's fears of a slowdown in revenue growth in FY13, as in its SEC filing, the Nasdaq-listed Cognizant said its senior executives will get 100 percent of their performance-linked stock units only if the company meets a sales target of $8.52 billion. In global markets, Asian stocks edged lower as political wrangling continued in the US over billions of dollars of upcoming tax hikes and spending cuts. Back home, the market breadth favoring negative trend; there were 1,104 shares on the gaining side against 1,306 shares on the losing side while 119 shares remain unchanged.

The BSE Sensex is currently trading at 19,267.12 down by 124.74 points or 0.64% after trading in a range of 19,491.60 and 19,186.24. There were 4 stocks advancing against 26 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.10% and Small cap index was up by 0.05%.

The top gaining sectoral indices on the BSE were, Consumer Durables (CD) up by 0.76% and Auto up by 0.03%, while IT down by 2.01%, TECk down by 1.73%, Power down by 0.66%, Capital Goods (CG) down by 0.64% and Bankex down by 0.60% were top losers on the BSE.

The top gainers on the Sensex were Bajaj Auto up by 1.22%, Tata Motors up by 0.65%, HDFC up by 0.47% and Reliance up by 0.18%. On the flip side, Infosys down by 2.41%, Bharti Airtel down by 1.95%, TCS down by 1.94%, Mahindra & Mahindra down by 1.25% and Hindalco down by 1.16% were the top losers on the Sensex.

Meanwhile, according to credit rating firm Fitch, the 2013 outlook for the country’s scam impacted telecom sector will be negative, due to the weak balance sheets due to regulatory payments to re-acquire licences and continuing limited ability to raise tariffs, given the high level of competition. Also, the Rs 14,000 crore base price set for auction for all- India spectrum is considered to high by the telecom firms.

The Government decision to change spectrum-allocation policy from a fixed-cost regime to an auction of all existing and future spectrum assets will significantly raise the cost of licences and spectrum, which will weaken the credit metrics of most telecom firms, if funded by debt, Fitch said. On February 2, the Supreme Court had cancelled 122 telecom licences on grounds of impropriety in policy implementation. Subsequently, the apex court directed the government to re-auction all the 122 cancelled licences.

Further, Fitch added that top four operators by revenue market share, Bharti Airtel (Bharti, BBB- /negative), Vodafone, Idea Cellular and RCom, will have to pay significant amounts for a one-off charge for excess spectrum (above 4.4MHz) and re-farming as well as future auctions of radiowaves, and believes the payment of one-off charge by telecom firms and re-farming costs will happen in 2013.

The S&P CNX Nifty is currently trading at 5,862.35, down by 38.15 points or 0.65% after trading in a range of 5,927.75 and 5,838.90. There were 11 stocks advancing against 39 declines on the index.

The top gainers of the Nifty were JP Associates up by 3.33%, Reliance Infra up by 1.32%, Bajaj Auto up by 1.23%, Tata Motors up by 0.69% and BPCL up by 0.59%.

On the flip side, Infosys down by 2.44%, HCL Tech down by 2.27%, Bharti Airtel down by 2.04%, TCS down by 2.00% and ACC down by 1.71% were the top losers on the Nifty.

Asian markets continue to trade mixed, Shanghai Composite was down by 0.03%, Straits Times was down by 0.03% and Taiwan Weighted was trading down by 0.34%.

On the other hand, Hang Seng up 0.10%, Jakarta Composite was higher by 0.24%, KLSE Composite was up by 0.20%, Nikkei 225 was up by 0.81% and Seoul Composite was up by 0.13%.