Benchmarks witness consolidation in early deals

After slumping about three percent, Indian equity benchmarks have witnessed consolidation in early deals on Friday with both the bourses trading tad below their neutral lines. Sentiments remained pessimistic as global markets extended their previous session’s southward journey with US markets tumbling for the second day and all the major indices pummeled by another over two percent on concerns about the outlook for the Federal Reserve’s stimulus program. Asian markets too were trading lower at this point of time amid concerns of Fed reducing its stimulus program and deepening Chinese slowdown.

Back home, key domestic benchmarks after a soft opening pared almost all their initial losses as investors opted to pile up positions in beaten down but fundamentally strong stocks. Some support came in from rally in software and technology counters as stocks like Tech Mahindra, Infosys, Mphasis, Mahindra Satyam, CMC and HCL Technologies edged higher amid recent weakness in rupee against the dollar. However, selling in banking counter dragged the benchmarks lower in early trades on worries that the rising rupee would force the Reserve Bank of India (RBI) to defer reduction in key policy rate going forward. 

On the sectoral front, software witnessed the maximum gain in trade followed by technology and oil and gas, while fast-moving consumer goods, consumer durables and banking remained the top losers on the BSE sectoral space. The broader indices were going neck-to-neck with benchmarks while, the market breadth on the BSE was negative; there were 584 shares on the gaining side against 675 shares on the losing side while 84 shares remain unchanged.

The BSE Sensex opened at 18,695.80; about 23 points lower compared to its previous closing of 18,719.29, and has touched a high and a low of 18,715.34 and 18,615.14 respectively.

The index is currently trading at 18,709.72, down by 9.57 points or 0.05%. There were 14 stocks advancing against 16 declines and one remains unchanged on the index.

The overall market breadth has made a weak start with 43.48% stocks advancing against 50.26% declines. The broader indices too were trading in red; the BSE Mid cap and Small cap indices down by 0.33% and 0.07% respectively. 

The only gaining sectoral indices on the BSE were, IT up by 1.32%, Teck up by 1.19%, Oil & Gas up by 0.96%, Realty up by 0.44% and Power up by 0.23%, while FMCG down by 0.51%, Consumer Durables down by 0.50%, Bankex down by 0.48%, Health Care down by 0.48% and Metal down by 0.29% were the top losers on the sectoral index.

The top gainers on the Sensex were Infosys up by 1.80%, Hero MotoCorp up by 1.75%, TCS up by 1.26%, BHEL up by 1.17% and RIL up by 1.15%.

On the flip side, Jindal Steel was down by 2.27%, Sun Pharma was down by 1.48%, HDFC was down by 1.43%, Hindalco Industries was down by 1.33% and ICICI Bank was down by 0.89% 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 opened at 5,639.90; about 16 points lower as compared to its previous closing of 5,655.90, and has touched a high and a low of 5,653.80 and 5,616.85 respectively.

The index is currently trading at 5,653.45, down by 2.45 points or 0.04%. There were 26 stocks advancing against 24 declines on the index.

The top gainers of the Nifty were Infosys up by 1.77%, NMDC up by 1.64%, Cairn up by 1.55%, Hero MotoCorp up by 1.53% and Reliance Industries up by 1.33%.

On the flip side, Jindal Steel down by 2.23%, Sun Pharmaceuticals down by 1.56%, ACC down by 1.54%, HDFC down by 1.49% and Hindalco Industries down by 1.33% were the major losers on the index.

All the Asian equity indices were trading in red; Shanghai Composite declined 19.21 points or 0.92% to 2,064.81, Hang Seng tumbled 298.07 points or 1.46% to 20,084.80, Jakarta Composite crumbled 143.72 points or 3.10% to 4,486.28, KLSE Composite dipped 11.26 points or 0.64% to 1,751.08, Nikkei 225 slipped 62.93 points or 0.48% to 12,951.65, Straits Times dropped 19.51 points or 0.62% to 3,113.75, KOSPI Composite contracted 36.83 points or 1.99% to 1,813.66 and Taiwan Weighted was down by 117.07 points or 1.48% to 7,781.84.