Benchmarks continue to languish in red on Fed’s taper decision

Despite recovering from day’s low, benchmark equity indices continue to languish in red territory, with loss of close to 3/4th of a percent, in proximity to the crucial 20,700 (Sensex) and 6,150  (Nifty) levels respectively. US Federal Reserve's move to taper its monetary stimulus, which is seen incrementally reducing the inflows into emerging markets, mainly led to early sell-off into equity markets. However, the markets managed to recoup some of its lost ground on bargain-buying activities, which gained momentum on the back of optimistic comments from Finance Minister, who underscored that government was committed to take all necessary steps to revive growth, boost investments, create conducive business environment, improving efficiency and depth of the markets, wider participation of investors and strengthening of the regulatory and institutional framework to channelize greater investments and to achieve potential growth of the Indian economy. Sectorally, while most sectoral indices were trading, Information Technology was making the most of this negative momentum, rallying on two aspects, depreciation of Indian currency and increasing signs of growth strength in US markets, which contributes to most of its global revenue. On the flip side, Bankex, Capital Goods and Oil & Gas pivotal were the worst performers of the session. The overall market breadth on BSE is in the favour of declines which thumped advances in the ratio of 886: 1025, while 120 shares remained unchanged.

The BSE Sensex is currently trading at 20711.50 down by 148.36 points or 0.71% after trading in a range of 21017.45 and 20646.03. There were only 10 stocks advancing against only 20 stocks declining on the index.

The broader indices too were trading in red; the BSE Mid cap index was down by 0.10%, while Small cap index down by 0.08%.

The gaining sectoral indices on the BSE were IT up by 2.01%, TecK up by 1.40%, and Metal up by 0.11%. While, Bankex was down by 2.32% Capital Goods was down by 1.82%, Oil and Gas was down by 1.46%, Realty was down by 1.20% and Power was down by 1.01% were the top losing index on BSE.

The top gainers on the Sensex were Wipro up by 2.09%, TCS up by 2.08%, Jindal Steel up by 1.95%, Sun Pharma up by 1.72% and SSTL up by 1.71%. On the flip side, ICICI Bank down by 2.79%, L&T down by 2.71%, HDFC down by 2.56%, ONGC down by 2.42% and Bharti Airtel down by 2.42%.

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 6,169.40 down by 47.75 points or 0.77% after trading in a range of 6,263.75 and 6,150.70. There were 13 stocks advancing against 37 declining on the index.

The top gainers of the Nifty were HCL Tech up by 3.89%, Wipro up by 2.21%, TCS up by 2.05%, SSTL up by 1.96% and Lupin up by 1.91%. On the flip side, NMDC down by 3.68%, Indusing Bank down by 3.34%, Kotak Bank down by 3.23%, PNB down by 2.95% and BPCL down by 2.93% were the major losers on the index.

Most of the Asian equity indices were trading in green; Jakarta Composite was up 1.08%, KLSE Composite was up 0.05%, Nikkei 225 was up 1.74%, Seoul Composite was up 0.05% and Taiwan Weighted was up by 0.70%.

On the flip side, Shanghai Composite was down 0.67%, Hang Seng was down 0.20% and Straits Times was down by 0.04%.