Indian equities add losses; FMCG, CD exerts pressure

Indian equities added losses to continue its weak trade hovering near the lowest point of the day in the late afternoon session on account of selling in frontline counters and taking cues from European counterparts. Traders were seen piling some position in Auto, Realty and Bankex sectors, while selling was witnessed in FMCG, Consumer Durables (CD) and Capital Goods sectors. Banking shares continued to be on buyer’s radar on hopes of approval of banking amendment Bill. The prospect of the banking amendment Bill gaining legislative approval brightened after key leaders of the principal opposition Bharatiya Janata Party (BJP) signaled their support. Aviation stocks Jet Airways, Kingfisher Airlines and Spicejet were also seen trading firm in green. In the scrip specific development, Tata Motors were trading in green after the British Jaguar Land Rover unit shrugged off the slowdown in key markets to report strong growth. GMR Infrastructure is trading firm on reports that the company is in discussion with lawyers to sue Maldives government for cancelling Male Airport contract. It is also planning to seek compensation of over $800 million after it was forced to hand over Male Airport to the latter. ITC was trading under pressure after FTSE lowered its free float weighting for the cigarette maker in its global equity index series. Hindustan Unilever (HUL) extended yesterday’s losses triggered by concerns that the company will face higher royalty payments to Unilever PLC.

On the global front, Asian markets were trading on a mixed note while the European markets were trading on pessimistic note. The European Union finance ministers moved closer to an agreement on a single euro-area bank supervisor that could give the European Central Bank more time to take on its expanded oversight role. The proposal also allows the ECB unlimited discretion to delay if it wants more time to prepare for its oversight mission.  Separately, industrial production in the euro zone declined in October. The production dropped 1.4% from a month ago in October after a 2.3% fall in September. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,900 and 19,300 levels respectively. The market breadth on BSE was negative in the ratio of 1277:1496 while 130 scrips remain unchanged.

The BSE Sensex is currently trading at 19,260.18, down by 95.08 points or 0.49% after trading in a range of 19,421.72 and 19,249.82. There were 8 stocks advancing against 21 declines on the index, while 1 stock remains unchanged.

The broader indices were too trading in red; the BSE Mid cap and Small cap indices were trading down by 0.03% and 0.04% respectively.

The top gaining sectoral indices on the BSE were, Auto up by 1.25%, Realty up by 0.44%, Bankex up by 0.30% and TECk up by 0.12%. On the other hand, FMCG down by 2.60%, Consumer Durables down by 1.52%, Capital Goods down by 0.78%, Metal down by 0.49% and Power down by 0.40% were the top losers on the Sensex.

The top gainers on the Sensex were Tata Motors up by 4.27%, Bharti Airtel up by 2.24%, Bajaj Auto up by 1.52%, ICICI Bank up by 1.19% and Jindal Steel up by 1.01%.

On the flip side, ITC down by 4.07%, Sterlite Industries down by 2.12%, HUL down by 1.67%, NTPC down by 1.47% and L&T down by 1.38% were the top loser on the Sensex.

Meanwhile, given the quiet response to the recently completed 2G spectrum auctions, the government is expected to discuss on December 13, recommendations made by the Empowered Group of Ministers (EGoM) on pricing of spectrum that was unsold in the recently conducted auction on November 14, 2012.

The EGoM on telecom headed by Finance Minister P Chidambaram is expected to have recommended a 30 percent reduction in reserve price for airwaves in the 1,800 Mhz band in four circles, namely Delhi, Mumbai, Karnataka and Rajasthan, that remained unsold in last auction, a move that could fetch Rs 6,200 crore to exchequer. However, at the old rates, the government would have earned a minimum of Rs 8,843.55 crore if the 5 Mhz each in these four circles were sold out.

Further, EGoM in its meet on December 7 also suggested auctioning spectrum in 900 MHz band in Delhi, Mumbai and Kolkata simultaneously with the sale of radio waves in 1800 Mhz in these four circles. Moreover, the EGoM also reportedly has decided to recommend to Cabinet that reserve price for premium 900 Mhz band, being used currently by Bharti Airtel, Idea Cellular and Vodafone in Delhi and Mumbai service area, be twice the reserve price for 1800 Mhz band.

The last 2G mobile phone spectrum auction emerged as damp squib with government managing to garner bids worth just Rs 9,407 crore as against a minimum target of Rs 28,000 crore, as there were no takers in the November auction for 1800 megahertz (MHz) radio waves on offer in the key telecom zones, or circles, of Delhi and Mumbai - the nation’s biggest telecom markets and Karnataka and Rajasthan. The government had put on auction a substantial part of the spectrum that was freed from Supreme Court in February this year cancelling 122 mobile permits issued by the then Telecom minister A Raja to nine telecom players in 2008.

The failure of spectrum auction could be highly attributed to the high reserve price fixed by government. The government had fixed around 8 times high reserve price for GSM spectrum and 11 times high price for CDMA spectrum compared to the amount on which companies were allocated pan-India permits till 2008.

The S&P CNX Nifty is currently trading at 5,860.25, down by 27.75 points or 0.47% after trading in a range of 5,907.45 and 5,855.25. There were 19 stocks advancing against 30 declines while 1 stock remains unchanged on the index.

The top gainers of the Nifty were Tata Motors up by 4.41%, Bharti Airtel up by 2.00%, Bajaj Auto up by 1.57%, HCL Tech up by 1.18%, ICICI Bank up by 1.15%.

On the flip side, ITC down by 4.10%, ACC down by 3.31%, Ambuja Cement down by 2.88%, Sesa Goa down by 1.95% and Hindustan Unilever down by 1.86% were the top losers on the index.

Asian markets were trading mixed; KLSE Composite gained 0.05%, Nikkei 225 surged by 1.68%, Straits Times added 0.49%, Seoul Composite spurts 1.38% and Taiwan Weighted advanced 0.87%. On the other hand, Shanghai Composite declined 1.02%, Jakarta Composite slid 0.72% and Hang Seng lost 0.26%.

The European markets were trading in red with, France’s CAC 40 lost 0.24%, Germany’s DAX dropped 0.16% while the United Kingdom’s FTSE 100 descended 0.07%.