Benchmarks fail to hold initial gains as US announces QE tapering

After the initial bump-up provided by the global markets, benchmarks failed to build momentum and turned negative on Thursday after the US Federal Reserve announced plans to cut its monthly bond purchase programme by $10 billion. Sentiments remained dampened as the rupee was trading lower. The partially convertible rupee was at 62.42 to the dollar versus its close of 62.09 on Wednesday. On the global front, most of the Asian equity markets were trading in the green at this point of time with Japanese market continuing its surge for the second consecutive day as the yen touched a five year-low against the dollar. Back home, traders were buying, IT, Teck and Healthcare, while selling was seen in Bankex, Capital Goods and Oil & Gas on the BSE. The market breadth on BSE remains negative with advances to declines in the ratio of 802:808. BSE Sensex and NSE Nifty were comfortably trading near their psychological 20,700 and 6,150 levels respectively.

The BSE Sensex is currently trading at 20720.12 down by 139.74 points or 0.67% after trading in a range of 21017.45 and 20646.03. There were 9 stocks advancing against 21 declines on the index. The broader indices were trading in red; the BSE Mid cap index was down by 0.01% and Small cap index lost 0.09%.

The top gaining sectoral indices on the BSE were, IT up by 2.38%, Teck up by 1.69%, Healthcare up by 0.46% and Metal up by 0.39%, while Bankex down by 2.05%, Capital Goods down by 1.72%, Oil & Gas down by 1.41%, Realty down by 0.90%  and FMCG down by 0.73% were the top losers on the sectoral index.

The top gainers on the Sensex were TCS up by 2.45%, Jindal Steel up by 2.33%, Infosys up by 2.24%, SSLT up by 1.24% and Hindalco Industries up by 1.19%. On the flip side, L&T was down by 2.64%, ICICI Bank was down by 2.51%, HDFC was down by 2.28%, ONGC was down by 2.24% and Bharti Airtel was down by 2.23% were the top losers on the Sensex.

Meanwhile, In a move which would ease the pressure on operators struggling with congested networks and possibly reducing the bidding amounts in the upcoming auctions, the government is set to allow telecom companies to share 2G spectrum with each other as long as their combined holding is not more than 50% of the total airwaves allotted in that region.

Although, the government may allow the operators to share the spectrum between two telcos holding 2G spectrum in the same service area, but will not allow the same between operators holding airwaves in two separate circles. Besides, bandwidth sharing will also not be allowed between operators holding 3G airwaves.

As per the draft note prepared by the department of telecommunications on spectrum sharing, two telephone operators can share 2G telecom spectrum without a one-time usage charge, if they have already paid for more than 4.4 MHz of GSM spectrum, or 2.5 MHz of CDMA spectrum. The sharing would be possible without any alterations in terms and conditions of licence of use of spectrum, including the carrier size indicated therein.

Further, telecom service providers, together, would have to pay spectrum usage charge at slab rates applicable on the combined spectrum holding according to the draft rules being prepared by the DoT. Moreover, while the permission to share will be granted after the payment for the spectrum holding is done based on its reserve or auction price, separate permission will be required to be granted from the DoT. Lastly, the government is expected to finalise spectrum-sharing rules, prior to the start of auctions on January 23.

The CNX Nifty is currently trading at 6,170.00 down by 47.15 points or 0.76% after trading in a range of 6,263.75 and 6,150.70. There were 12 stocks advancing against 38 stock declines on the index.

The top gainers of the Nifty were HCL Tech up by 4.51%, Jindal Steel up by 2.17%, TCS up by 2.51%, Infosys up by 2.01% and Lupin up by 1.88%. On the flip side, Kotak Bank down by 3.09%, PNB down by 3.01%, L&T down by 2.58%, Power Grid down by 2.50% and Axis Bank down by 2.43% were the major losers on the index.

Most of the Asian equity indices were trading in green; Hang Seng rose 33.41 points or 0.14% to 23,177.23, Jakarta Composite strengthened 43.71 points or 1.04% to 4,240.00, KLSE Composite increased 2.04 points or 0.11% to 1,849.54, Nikkei 225 surged 221.48 points or 1.42% to 15,809.28, Straits Times jumped 5.86 points or 0.19% to 3,067.64 and Taiwan Weighted was up by 37.08 points or 0.44% to 8,386.12.

On the flip side, Shanghai Composite slipped 1.90 points or 0.09% to 2,146.39 and Seoul Composite was down by 1.59 points or 0.08% to 1,973.04.