Benchmarks add losses; Trade at two month lows

Indian equity markets added losses to continue their weak trade hovering near the lowest point in more than two months in the late afternoon session on account of selling in frontline blue chip counters and taking cues from European counterparts. The sentiments were on negative note from the morning after Federal Reserve Chairman Ben S. Bernanke stated that the bank may end bond purchases next year if the economy strengthens in line with forecasts. The pessimism on the street continued despite Chief Economic Advisor to the Finance Ministry Raghuram Rajan stated that the government is ready to take step to curb volatility with the rupee dipping to an unprecedented low level. Traders were seen selling in Realty, Metal and Bankex sector stocks. In scrip specific development, Sintex Industries was trading in red after announcement of the stock’s exclusion from the National Stock Exchange’s (NSE) futures and options (F&O) segment. Tourism Finance Corporation was trading firm on submitting application with RBI for banking licence. Marg was locked at upper circuit limit after the Securities Appellate Tribunal (SAT) allowed Akahya Infrastructure to withdraw open offer for acquiring stake in the company.

On the global front, all the Asian markets were trading in red while the European markets were too trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,700 and 18,800 levels respectively. The market breadth on BSE was negative in the ratio of 549:1578, while 108 scrips remain unchanged. 

The BSE Sensex is currently trading at 18,765.02, down by 480.68 points or 2.50% after trading in a range of 19,069.20 and 18,744.36. There were 2 stocks advancing against 28 declines on the index.

The broader indices were too trading in red; the BSE Mid cap and Small cap indices plunged 1.74% and 1.67% respectively.

Amidst across the board selling, the top losing sectoral indices on the BSE were, Realty down by 4.75%,Metal down by 4.38%, Bankex down by 3.64%, Power down by 3.09% and Oil & Gas down by 3.00% while there were no gainers on the BSE.

The only gainers on the Sensex were Sun Pharma up by 1.23% and Wipro up by 1.01%. On the flip side, Jindal Steel down by 7.91%, Hindalco Industries down by 6.05%, Tata Steel down by 5.70%, Sterlite Industries down by 4.28% and BHEL down by 4.02% were the top losers on the Sensex.

Meanwhile, to address funding challenges of the telecom sector, the government will set-up the Telecom Finance Corporation (TFC) and infuse Rs 1,000 crore of the proposed authorised capital of Rs 10,000 crore in it. Further, the TFC is proposed to be set-up on the lines of sectoral finance bodies such as the Tourism Finance Corporation of India and Power Finance Corporation and will be registered as non-banking financial corporation and non deposit infrastructure finance company. The Cabinet has already approved for the creation of TFC under the National Telecom Policy 2012.  

Initially, the government of India will have 100 percent shareholding in TFC and initial equity capital is proposed to be sought through budgetary support. Banks and other financial institutions could be offered equity participation later in order to spread the financial burden and encourage broader participation of the financial community. The fund infusion for telecom finance body is proposed to be done through taxable as well as tax-free bonds, term loans from banks and other financial instruments, off-shore borrowings from multilateral agencies such as International Monetary Fund, World Bank and Asian Development Bank.

As per the government estimate, telecom sector debt market under the 12th Five Year Plan (2012-17) should be around Rs 7.55 lakh crore and TFC, which will initially target 5 percent of this debt market, will translate into a loan portfolio of Rs 38,000 crore in 5 years, approximately Rs 7,000 crore annually. Further, TFC will target to maintain debt equity ratio of 5 for first five year of its establishment and will operate in the interest margin of 200 to 250 basis points.

The CNX Nifty is currently trading at 5,667.35, down by 154.90 points or 2.66% after trading in a range of 5,755.00 and 5,660.05. There were 2 stocks advancing against 47 declines while 1 stock remained unchanged on the index.

The only gainers of the Nifty were Sun Pharma up by 1.39% and Ambuja Cements up by 0.24%. On the flip side, Jindal Steel down by 7.93%, DLF down by 7.16%, JP Associate down by 6.79%, Hindalco Industries down by 6.14% and Tata Steel down by 5.87% were the major losers on the index.

All the Asian equity indices were trading in red; Shanghai Composite dropped 2.77%, Hang Seng tumbled 2.88%, Jakarta Composite declined 3.52%, KLSE Composite dipped 0.53%, Nikkei 225 decreased 1.74%, Straits Times crumbled 2.33%, KOSPI Composite contracted 2.00% and Taiwan Weighted descended 1.35%.

The European markets were trading in red; France’s CAC 40 was down 2.03%, Germany’s DAX lost 2.18% and the United Kingdom’s FTSE 100 edged lower 1.92%.