Indian equities regain momentum; trade close to day’s highs

After paring some early gains in the late morning session, Indian equity markets have regained the optimistic momentum and are clawing back towards the session’s highs. The frontline indices got firm support around the psychological 16,850 (Sensex) 5,050 (Nifty) levels as they rebounded from thereon, thanks to the hefty buying in Information Technology and FMCG sectors. Sentiments in the session remained sanguine even as the government bowed to intense pressure from within and outside and announced suspension of its decision to allow FDI in retail, bringing Parliament back to business after nine days of logjam. Investors added positions with conviction on hopes that the Reserve Bank of India will abstain from hiking key interest rates in its monetary policy review meet on December 16, buttressing buying interests in rate sensitive counters. On the global front, most Asian equity indices traded on an encouraging note while the European futures too showed that the markets there would start in the green terrain. Investors globally remained optimistic as worries over the rating agency S&P’s warning of mass EU downgrade waned and made way for cautious optimism that Euro-zone policymakers will deliver a comprehensive plan to avert the region's onerous debt crisis at a summit later this week. Back home, on the BSE sectoral space, IT counter jumped around one and half a percent, being the top gainer in the space followed by the defensive FMCG pocket that surged over a percent. On the other hand, the Capital Goods and Healthcare counters bucked the largely optimistic trend and traded with around half a percent cuts.

Moreover, the broader markets traded on a positive note with moderate gains of under half a percent and were outperformed by their larger peers. So far strong volumes of over Rs 0.60 lakh core was seen in the market. The breadth on BSE was in favour of advances in the ratio of 1371:1124 while 133 scrips remained unchanged.

The BSE Sensex is currently trading at 16,929.27 up by 123.94 points or 0.74% after trading as high as 16,995.08 and as low as 16,781.62. There were 24 stocks advancing against 6 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index gained 0.41% and Small cap rose 0.36%.

On the BSE sectoral space, IT up 1.44%, FMCG up 1.20%, Auto up 0.92%, Oil & Gas up 0.69% and Metal up 0.69% were the major gainers while Consumer Durables down 0.59%, Healthcare down 0.48 and PSU 0.05% were the only losers in the space.

Tata Power up 2.62%, JP Associates up 2.39%, Hindalco up 2.20%, Infosys up 1.84% and Wipro up 1.84% were the major gainers on the Sensex, while Coal India down 2.95%, Bharti Airtel down 2.32%, NTPC down 1.68%, Cipla down 1.47% and ICICI Bank down 0.67% were the major losers in the index.

Meanwhile, the ministry of finance has called a meeting to sort out differences between telecom ministry and defence ministry over the issue of vacation of spectrum. Further, the finance ministry will also review the progress on waiver of spectrum charges and setting up of dedicated Optical Fiber Network (OFC) for defence that would help vacation of spectrum of 20 MHz in the 2G band and also in the 3G band.

The ministry of defence has agreed to release an extra 150 MHz to the telecom ministry in a phased manner. Beside this, the defence ministry may be required to free extra 10+10 MHz from 1805 MHz-1880 MHz in 2G band. This will allow reframing of 900 MHz, which may be put to auction in 2014.

On the basis of bids last year, the vacation of additional 2G and 3G spectrum may generate extra revenue of around Rs 80,000 crore.  Last financial year the department of telecom (DoT) generated around Rs 1.06 lakh crore from the auction of 3G and Broadband Wireless Access Spectrum.   Because of the differences between DoT and other departments such as information and broadcasting, defence and space on vacation of spectrum, the DoT had decided to take up the issue of vacation of spectrum to the EGoM, which would also look into identification of defence band. The DoT is in talks with various ministries for vacation of spectrum to make sure future availability of the spectrum for the telecom industry. 

Along with the various ministries, the DoT is also in discussion with the Power Grid Corporation of India for vacation of 10 to 12 MHz in different circles to make one chunk of 20 MHz pan-India. The telecom industry is already facing a spectrum scarcity. As per the Telecom Regulatory Authority of India (TRAI), the total requirement of spectrum in the coming five years would be around 500-800 MHz, including 275 MHz for voice services alone.

The S&P CNX Nifty is currently trading at 5,077.80, higher by 38.65 points or 0.77% after trading as high as 5,097.15 and as low as 5,032.25. There were 40 stocks advancing against 10 declines on the index.

The top gainers on the Nifty were R Com up 3.56%, HCL Tech up 3.10%, JP Associates up 2.38%, Tata Power up 2.31% and SAIL up 2.17%.

Coal India down 3.21%, Bharti Airtel down 2.38%, BPCL down 2.09%, NTPC down 1.65% and Cipla down 1.46% were the major losers on the index.

Asian markets traded on an encouraging note, Shanghai Composite gained 0.06%, Hang Seng climbed 0.90%, Jakarta Composite rose 0.39%, Nikkei 225 soared 1.71%, Straits Times surged 1.05%, Seoul Composite ascended 0.87% and Taiwan Weighted jumped 1.10%.

On the flipside only KLSE Composite slipped 0.31%.