Benchmarks recover from intra-day’s low level; HCL technologies Q1 earnings aids

Indian equity markets have pared off some of their losses, as some support was rendered to bourses at lower level, which made some fundamentally blue chip stocks look lucrative at prevailing levels. Q1 earnings of HCL Technologies mainly offered some solace to the ailing equity markets, besides paring losses for Information Technology pivotal, which appeared distantly close of breaching the green territory. HCL stock rose over 6% after the company posted a rise of 70.84% in its net profit at Rs 658.75 crore for the quarter ended June 30, 2012 as compared to Rs 385.59 crore for the same quarter in the previous year. However, even stocks from Metal, Consumer Durable and Power counters, which featured in the list of worst performers, highlighted the underlying weakness of the bourses. However, cautious start of European counterparts, could further add to the downside triggers of the market going further in the day, which have factored in lack of policy reforms announcements anytime soon. Closer home, barometer 30 share index, Sensex, was trading above the 16750 mark, while the benchmark 50 share index, Nifty, was trading below the 5100 bastion. The broader indices too floated in the sea of red. Being the penultimate day of F&O expiry, trade of Rs 1.85 lakh core was so far done in terms of volume turnover, with the market breadth largely divided in the favour of declines which thumped advances in the ratio of 1569:897, while 116 shares remained unchanged.

The BSE Sensex is currently trading lower by 140.13 points or 0.83% at 16777.95 after trading as high as 16899.01 and as low as 16736.60. There were 4 stocks advancing against 26 declines on the index.

The broader indices continued to gyrate in the sea of red; the BSE Mid cap and Small cap indices were down by 1.01% and 0.94% respectively.

There was no gainer on the BSE sectoral, while Metal down by 2.31%, CD down by 1.78%, Power down by 1.51%, Oil & Gas and PSU were down by 1.25%, Auto down by 1.12%, were the losers on the index. ITC up by 0.32%, HDFC Bank up by 0.20%, HDFC up by 0.14% and Sun Pharmaceuticals up by .05% were major gainers on the Sensex, while Jindal Steel down by 3.83%, Sterlite Industries down by 2.84%, Bharti Airtel down by 2.43%, Wipro down by 2.38% and Hindustan Unilever down by 2.35%, were major losers in the index.

Meanwhile, the Empowered Group of Ministers (EGoM) on telecom has yet again deferred a decision on one-time fees payable by incumbent telecom operators, on July 24, until the observations of the Supreme Court on the presidential reference are secured. This is for the second time in less than a week that the EGoM, headed by Home Minister P Chidambaram has deferred taking a decision on the matter.

The panel, which last met on July 20, recommended Rs 14,000 crore and Rs 15,000 crore reserve prices for 5 MHz pan India spectrum in 1,800 MHz band. Meanwhile, TRAI recommended Rs 18,110 crore reserve price for the same spectrum. The EGoM suggested two options for spectrum usage charge, a flat 5 per cent of revenue or retaining the status quo of 3-8 per cent, depending on the amount of spectrum held. 

Besides that, it also favoured deferred payment method for 2G spectrum, in line with the recommendations of the Telecom Regulatory Authority of India (TRAI). Under this process, telecom companies will have to pay a certain amount of money up front for the spectrum, and the rest over a period of time. However, they will also have to pay interest on the deferred portion of the payment.

The ministerial panel even managed to pencil down stricter roll-out obligations for successful bidders and mandated Department of Telecommunications (DoT) to sketch a fresh matrix on the impact of the reserve price chosen on government revenue and operators’ rates. As per the new roll-out obligation, successful bidders will have to cover 10% of DHQs (district headquarters) by the third year, 20% of DHQs in the fourth year and 30% of DHQs by the fifth year. However, earlier the TRAI had recommended the operators that win spectrum would have to cover 50% of villages, in three years, and 100% coverage of the country in four years.

With the industry crying foul, the TRAI has proposed a near 10-fold rise in the auction’s starting price compared to what carriers paid in 2008. The regulator recommended 2G spectrum reserve price at Rs 3,622 crore per unit of spectrum in the 1800 MHz band, which translates to an amount of over Rs 18,000 crore for pan-India license, i.e. 13x of current base price of 2G and equivalent to 3G spectrum cost, where radio airwaves were vacated following the Supreme Court’s verdict on February 2 cancelling all the 122 spectrum licenses allotted in 2008 during the tenure of the former telecom minister A Raja.

The S&P CNX Nifty is currently trading lower by 44.10 points or 0.86% 5084.10, after trading as high as 5,121.60 and as low as 5,076.60. There were 8 stocks advancing against 42 declines on the index.

The top gainers on the Nifty were HCL Tech up by 6.58%, Ambuja Cement up by 3.12%, ACC up by 0.74%, HDFC Bank up by 0.42% and ITC up by 0.24%. While, SAIL down by 4.79%, Jindal Steel  down by 3.98%, Sterlite Industries down by 3.05%, Reliance Infra down by 2.98% and Bharti Airtel down by 2.72% were the major losers on the index.

Asian equity indices were trading in red; KLSE Composite declined by 0.11%, Hang Seng index skid 0.19%, Nikkei 225 plunged 1.44%, Taiwan Weighted slipped by 0.42%, Shanghai Composite down by 0.49%, Kospi Composite Index plunged 1.37, Straits Times descended by 0.54% and Jakarta Composite inched lower by 0.09%.

European markets got off to a cautious start; CAC 40 was trading higher by 0.08%, while DAX and FTSE100 were trading lower by 0.01% and 0.19% respectively.