Indian equities pare gains; trade continues in red

Indian equities pared gains to continue its weak trade below neutral line hovering near the lowest point of the day in the late afternoon session on account of selling in frontline counters and taking cues from subdued European counterparts. The sentiments on the street were on cautious note after HSBC came out with its report where it further slashed its India growth forecast for the current and next fiscal years, saying the slowdown in the economy has become more structural than cyclical. HSBC cut its GDP forecast for the year ending in March to 5.2% from 5.7%, and its forecast for the next fiscal year to 6.2% from 6.9%. Traders were seen piling some position in Auto, Bankex and Oil & Gas sectors while selling was witnessed in Realty, Power and Capital Goods sectors.

In the scrip specific movement, Arshiya International extended losses for the second day in a row and was locked at lower circuit limit after the company sacked several top-level employees due to a slowdown while the sacked employees, on the other hand, have alleged financial irregularities in the company and non-payment of salaries to staff since September. Adani Power, a subsidiary of Adani Enterprises, was trading in red after the foreign research firm UBS recommended a sell rating on the stock. ICICI Bank was trading under pressure after Australia’s Perdaman Chemicals threatened the bank with legal action. Indiabulls Power and BHEL dropped after Barclays Capital and Citigroup warned that the two thermal power projects with which the two companies were involved with could have been held up for financial irregularities. Oil and Natural Gas Corporation (ONGC) was trading firm as the research firm Goldman Sachs recommended a buy rating on the stock.

On the global front, most of the Asian markets were trading in green while the European markets were trading on a mixed note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 6,000 and 19,700 levels respectively. The market breadth on BSE was negative in the ratio of 1101:1742 while 118 scrips remain unchanged.

The BSE Sensex is currently trading at 19,618.49, down by 48.10 points or 0.24% after trading in a range of 19,783.75 and 19,607.40. There were 11 stocks advancing against 19 declines on the index.

The broader indices were also trading lower; the BSE Mid cap and Small cap indices were trading lower by 0.68% and 0.61% respectively.

The only gaining sectoral indices on the BSE were, Auto up by 0.33%, Bankex up by 0.06% and Oil & Gas up by 0.01% and while, Realty down by 0.92%, Power down by 0.89%, Capital Goods down by 0.82% Metal down by 0.63% and Health Care down by 0.62% were the top losers on the index.

The top gainers on the Sensex were Tata Motors up by 2.08%, ONGC up by 1.37%, HDFC Bank up by 0.79%, Coal India up by 0.47% and Maruti Suzuki up by 0.33%.

On the flip side, BHEL down by 2.11%, Sterlite Industries down by 1.75%, Bharti Airtel down by 1.26%, Hindalco Industries down by 1.17% and HDFC down by 1.07% were the top losers on the Sensex.

Meanwhile, India's leading cellular players are expected to challenge a government demand for surcharges aggregating more than Rs 23,000 crore on their airwave holdings. The government traditionally sold airwaves bundle with permits at a low state-set price, but following a scandal over the grant process a recent auction of second-generation airwaves has resulted in newer carriers paying nearly seven times more.

After the cabinet approved the plan in November, telecom ministry has started issuing notices to telecom players including Bharti Airtel and Vodafone Group demanding to pay the surcharge. The government added that the surcharges for long-established telecom players are aimed at creating a balanced level between old and new operators. Whereas, as per the older operators, the move violates the conditions of their licence agreements with the government.

To be more precise, the government is expected to get Rs 4,251.83 crore from retrospective charges, Rs 18,925.82 crore from prospective charges. In all Rs 23,977.65 crore is expected from levy of one-time spectrum fee. Accordingly, state-owned BSNL will have to pay around Rs 6,912 crore, followed by Bharti Airtel - Rs 5,201 crore, Vodafone - Rs 3,599 crore, MTNL - Rs 3,205 crore, Idea Cellular - Rs 2,113 crore (includes Rs 231.5 crore of Spice), Aircel - Rs 1,365 crore (includes Rs 14 crore of Dishnet), Loop Mobile - Rs 606 crore and Reliance Communications - Rs 173 crore.

Further, for paying the surcharge, companies have the option to pay the money upfront or in annual installments with a 9.75 percent interest. Additionally, Reliance Communications, which is operating GSM and rival CDMA technology for mobile services, will have to separately pay surcharges for CDMA airwaves. Further, CDMA surcharges are yet to be finalized as the government is waiting for an auction in March.

Meanwhile, the Cellular Operators Association of India, which has most of the country's major carriers among its members, said ‘our lawyers will review those and then most probably we'll go to Telecom Disputes Settlement and Appellate Tribunal (TDSAT). Further, the surcharges are for companies operating on the GSM technology platform and are benchmarked to winning bid prices in the recent auction.

The S&P CNX Nifty is currently trading at 5,953.85, down by 17.65 points or 0.30% after trading in a range of 6,005.15 and 5,951.00. There were 18 stocks advancing against 32 declines on the index.

The top gainers of the Nifty were Tata Motors up by 1.96%, HCL Tech up by 1.44%, ONGC up by 1.30%, Bank of Baroda up by 1.10% and HDFC Bank up by 0.82%.

On the flip side, BHEL down by 2.07%, Sesa Goa down by 1.78%, Ambuja Cement down by 1.73%, Grasim Industries down by 1.59% and Lupin down by 1.35% were the major losers on the index.

Most of the Asian equity indices were trading in the green; Shanghai Composite rose 0.37%, Hang Seng surged 0.59%, Nikkei 225 soared 0.70%, KOSPI Composite added 0.75% and Taiwan Weighted was up by 0.94%, while Jakarta Composite declined 1.28%, KLSE Composite was down by 0.20% and Straits Times descended by 0.04%.

The European markets were trading on a mixed note with, France’s CAC 40 lost 0.50%, Germany’s DAX descended 0.01% while the United Kingdom’s FTSE 100 edged higher 0.05%.