Indian equities trim gains; Sensex below 20,000 mark

Indian equity markets trimmed gains 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 the European counterparts. The sentiment turned cautious after Reuters poll found that inflation will remain persistently high, preventing the Reserve Bank of India (RBI) from cutting rates too aggressively, and that economic growth will not soon return to levels as strong as just few years ago. On the other hand, the outcome of the poll also stated that the country’s economy will pick up steam this year after its worst performance in a decade as a slew of reforms take hold and the RBI eases policy to spur growth. Traders were seen piling some position in TECk sectors while selling was witnessed in Realty, PSU and Auto sector.

In the scrip specific movement, telecom stocks were trading firm after the companies raised call tariffs sharply upwards. In a blow to consumers, both Bharti Airtel and Idea Cellular have increased their call tariff rates by nearly 100 percent. United Spirits was trading in green after Deutsche Bank initiated coverage of the company with a buy rating, citing its 53% market share in the Indian spirits market, the significant entry barriers to foreign players, and the benefits from its deal to sell a majority stake to Diageo. Indiabulls Real Estate was trading in green after the research firm JP Morgan stated that they are overweight on the stock. Hindustan Unilever was trading in red after foreign brokerage firm Morgan Stanley downgraded the company to underweight from equal-weight, citing disappointing October-December volume growth and the impact on earnings from its hike in royalty payments.

On the global front, the Asian markets were trading on a mixed note while the European markets were trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 6,050 and 20,000 levels respectively. The market breadth on BSE was negative in the ratio of 946:1803 while 133 scrips remain unchanged.

The BSE Sensex is currently trading at 19,938.28, down by 43.29 points or 0.22% after trading in a range of 20,055.07 and 19,936.40. There were 11 stocks advancing against 18 declines while 1 stock remains unchanged on the index.

The broader indices succumbed to selling pressure; the BSE Mid cap and Small cap index were trading lower by 1.09% and 0.74% respectively.

The only gainer in sectoral indices on the BSE was TECk up by 0.11%. While, Realty down by 1.40%, PSU down 1.34%, Auto down by 1.17%, Consumer Durables down by 1.13% and Metal down by 1.05% were the top losers on the index. 

The top gainers on the Sensex were Bharti Airtel up by 3.46%, ITC up by 1.33%, Cipla up by 0.98%, HDFC Bank up by 0.95% and Dr. Reddy’s Lab up by 0.61%.

On the flip side, Hindustan Unilever was down by 4.95%, Hindalco Industries down by 2.84%, Tata Motors was down by 2.53%, Bajaj Auto down by 1.87% and NTPC down by 1.58% were the top losers on the Sensex.

Meanwhile, the government has issued guidelines for the second round of spectrum auction which is expected to fetch around Rs 45,000 crore to exchequer from airwaves sale. However, the guidelines did not mention the timeline for starting auction and related dates.

In the second round of auction, the government will put unsold GSM spectrum in 1800 MHz band, CDMA spectrum in 800 MHz and airwaves held by telecom licences in 900 MHz band that is coming for renewal starting 2014 onwards. As per the auction guidelines, spectrum auction for 1800 MHz and 900 MHz band, currently being used for GSM services, will be conducted simultaneously and auction of 800 MHz band, being used for CDMA services, in 21 out of 22 service area will be conducted separately.

Meanwhile, the government approved a 50 per cent reduction in the reserve price of CDMA spectrum for the auction to be scheduled in March. In the previous auction, reserve price for CDMA spectrum was 11 times higher than the amount telecom operators paid in 2008. The government also slashed the base price of unsold GSM spectrum by 30 per cent, while the price of spectrum in 900 MHz has been fixed at two times the price of airwaves in 1800 MHz.

The S&P CNX Nifty is currently trading at 6,028.65, down by 19.85 points or 0.33% after trading in a range of 6,069.80 and 6,027.95. There were 16 stocks advancing against 34 declines on the index.

The top gainers of the Nifty were Bharti Airtel up by 3.47%, ITC up by 1.30%, Asian Paints up by 1.06%, UltraTech Cement up by 0.98% and HDFC Bank up by 0.89%.

On the flip side, Hindustan Unilever down by 4.72%, HCL Tech down by 4.65%, BPCL down by 3.63%, IDFC down by 3.43% and Hindalco Industries down by 3.01% were the major losers on the index.

Most of the Asian equity indices are trading in red; Hang Seng down by 0.10%, Jakarta Composite declined 0.44%, Nikkei 225 declined 2.08%, KOSPI Composite declined 0.81%, and Taiwan Weighted was down by 0.19%. On the flip side, Shanghai Composite gained by 0.25%, KLSE Composite up by 0.52% and Straits Times up by 0.44% were the only gainers amongst Asian pack.

The European markets were trading in red with; France’s CAC 40 lost 0.59%, Germany’s DAX dropped 0.68% while the United Kingdom’s FTSE 100 edged lower by 0.03%.