Benchmarks off intra-day’s low; broader indices gain momentum

Benchmark equity indices, albeit off intra-day’s low, are trading lackluster in absence of any triggers with market-participants waiting for Rajya Sabha to vote on FDI after Opposition motion seeking immediate withdrawal of the decision was rejected convincingly in Lok Sabha. 30 share index, Sensex, was trading below 19300 level, with loss of over half a percent. Similarly, 50 share index, Nifty, too was oscillating sub 5900 bastion. Meanwhile, broader indices, acting contrary to the trend, were trading higher by 0.10%. Highlighting the underlying cautious mood of Indian equity markets, were stocks from Information Technology, Capital Goods and Bankex space. However, buying was witnessed in stocks from Consumer Durable, Realty and Auto counters. Tech stocks are down after a routine regulatory filing by Cognizant indicated that company’s growth expectations are lowered. While, as expected, retail companies are trading in the green on hopes of FDI in multi brand retail soon turning into a reality. Further, even Fertilizer stocks, such as Chambal Fertilisers, RCF, Coromandel International and National Fertiliser have enticed some traction on hopes of CCEA nod for new urea investment policy.

On the global front, Asian shares rose to a 16-month high on Thursday after US President Barack Obama said a deal to avert the so-called fiscal cliff of year-end tax hikes and spending cuts was possible in 'about a week' if Republicans compromise on taxes. Meanwhile, European (SXXP) stock futures advanced, before the European Central Bank unveils its first economic forecast for 2014.

Closer home, the BSE Sensex is currently trading at 19269.72, down by 122.14 points or 0.63% after trading in a range of 19491.60 and 19186.24. There were 5 stocks advancing against 25 declines on the index. The overall market breadth on BSE is in the favour of declines which were outnumbering advances in the ratio of 1397:1202, while 117 shares remained unchanged.

The broader indices, staging a contrary trend, gained some additional momentum; the BSE Mid cap and Small cap indices were trading higher by 0.17% and 0.11% respectively.

The top gaining sectoral indices on the BSE were, Consumer Durables (CD) up by 0.71%, Realty up by 0.22% and Auto up by 0.15%, while IT down by 2.10%, TECk down by 1.69%, Capital Goods down by 0.68% Bankex down by 0.59% and HC down by 0.54% and were the major losers on the BSE.

The three gainers on the Sensex were Bajaj Auto up by 1.59%, Tata Motors up by 0.98%, Sterlite Industries up by 0.71%, HDFC up by 0.45% and RIL up by 0.10%.

On the flip side, Infosys down by 2.47%, TCS down by 1.94%, Bharti Airtel down by 1.50%, Cipla down by 1.44%, Hindalco Industries down by 1.37% 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 5,861.60, down by 38.90 points or 0.66% after trading in a range of 5,927.75-5,838.90. There were 9 stocks advancing against 41 declines on the index.

The top gainers of the Nifty were JP Associates up by 3.82%, Bajaj Auto up by 1.49%, Reliance Infrastructure up by 1.36%, Tata Motors up by 0.15% and DLF up by 0.88%

On the flip side, HCL Tech down by 2.97%, Infosys down by 2.52%, TCS down by 2.00%, Hindalco Industries down by 1.69% and IDFC down by 1.67% and were the top losers on the Nifty.

Asian markets were mostly trading in positive terrain, Straits Times gained 0.08% Hang Seng added 0.05%,Jakarta Composite advanced 0.21%, KLSE Composite rose 0.21%, Nikkei 225 surged 0.81% and Seoul Composite was trading higher by 0.13%On the other hand, Shanghai Composite and Taiwan Weighted down by 0.15% and 0.34% respectively were the losers among the Asian pack.