Benchmarks end a disappointing day with half a percent cut

Indian stock indices showed a disappointing performance in today's trading session after a resilient show in yesterday's trade. Investors squared off position in the dying hours of trade as sentiments turned pessimistic on concerns over the central government reshuffling its portfolios. The NSE's 50-share broadly followed index, Nifty once again dipped below the psychological 5,700 support level while the Bombay Stock Exchange's Sensitive Index, Sensex a saw triple digit fall to sink below the crucial 19,000 mark. However, broader markets managed to outperform the larger peers today as the BSE's midcap and smallcap indices settled with moderate gains. Metals counter saw huge buying interests in the day's trade as it gained 1.78% on the BSE, being the biggest gainer in the space, as international metal prices hit a record high lifted by a fall in the dollar. Majors like SAIL and JSW Steel zoomed 4.76% and 3.61% respectively. Investors also remained optimistic on real estate sector which advanced 1.66% with stocks like DLF and Sobha Developers surging 3.13% and 3.78%. On the earnings front, HCL Tech one of the leading software exporters, surged by 5.17% on posting a jump in net profit of 34.2% y-o-y basis (20.7% sequentially) for the quarter ended December 2010. LIC housing Finance too soared 9.61% on reporting net profit of Rs 213.49 crore, compared with Rs 153.58 crore for the quarter ended December 31 last year. On the other hand, Capital Goods, IT and Oil & Gas packs saw profit booking this Wednesday and ended with a cut of over a percent on the BSE. ONGC declined 1.20% as its fuel subsidy bill is likely to increase by nearly 21% to about Rs 4,222 crore in the third quarter of this financial year.

On the global front, majority of the Asian markets ended in the green territory led by the Chinese benchmark which rose the most in today's trade as sentiments got a boost over hopes that China's steps to slow inflation won't curb its economic expansion. However, stocks in Europe traded with a negative bias as key benchmark indices traded with cuts of around a quarter percent point with FTSE 100 being the biggest laggard in the space. US index futures too are trading in the negative terrain and the screen trading for index futures indicates that the Dow could lose 0.10% at the opening.

Earlier on the Dalal Street, the bourses got a positive start as most Asian equity indices extended their gains in the morning trade as gains in technology related stocks underpinned regional sentiments. However the frontline indices drifted into the negative territory in no time as volatility crept in.  The benchmarks traded in the green in the initial moments of the second half but a sudden sharp cut was witnessed in the late trade and indices tumbled deep into the red.  Thereafter there were no signs of sizeable recovery attempt which could lead the indices in green and they finally settled with cuts of around half a percent. Volumes for markets stayed marginally higher than Tuesday at around Rs 1.42 lakh crore. The market breadth on the BSE was positive as there were 1416 shares on the gaining side against a 1387 shares on the losing side while 190 shares remained unchanged.

On Charts: The S&P CNX Nifty is likely to face resistance around 5752 and 5798 levels while supports will be around 5640 and 5610. Meanwhile, if it breaks and closes below 5610 in near term the downward trend may continue further.

Finally, the BSE Sensex doused 113.7 points or 0.60% to settle at 18,978.32 while the S&P CNX Nifty dived 33 points or 0.58% to end at 5691.05.

The BSE Sensex touched a high and a low of 19,167.06 and 18,898.56, respectively.

The top gainers on the Sensex were DLF up 3.13%, Sterlite Inds up 2.74%, Rel Infra up 2.71%, Hindalco Inds up 2.63% and Bajaj Auto up 1.96%.

Infosys down 1.99%, L&T down 1.87%, SBI down 1.86%, HDFC Bank down 1.48% and Hero Honda down 1.46%, were the top losers on the index.

The BSE Mid-cap and Small-cap indices rose 0.15% and 0.09%, respectively.

Meanwhile, the Telecom Regulatory Authority of India (TRAI) said on Tuesday that it will come up shortly with the new proposals on pricing of excess second generation (2G) mobile spectrum held by incumbent operators in various circles. Chairman of the regulatory body J S Sarma said that TRAI will make an announcement "in the next few days" on the issue of 2G pricing. The regulator would also be coming out with a consultation paper on 4G towards the middle of the year.

TRAI's original recommendation on 2G pricing issued in May last year had maintained that operators should pay a one-off fee for holding more than 6.2MHz of 2G spectrum. The prices for such spectrum were recommended to be computed from the prices discovered in the 3G auction which was severely contended by telecom players. Along with some other recommendations on the 2G spectrum, the TRAI report issuing these was dubbed biased and regressive by some of the biggest telecom players in the country and no final call on the matter has yet been taken. 

It is not yet clear if the regulator will put forward a similar approach this time around. When asked by media persons if the 2G pricing will be linked to that of 3G in the new proposals as well, Sarma said "I do not know", indicating some new thinking was perhaps going on in the regulator to take the telecom players on board. Perhaps TRAI may look to choose a price which in middle of original prices paid by telcos and the price discovered in 3G.

This seems to be a significant diversion from TRAI's earlier stand where it stated that the price for spectrum in the 900 MHz band be fixed at 1.5 times the price for the 1800 MHz band. "In the section related to spectrum pricing, we clearly stated that the 2001 price did not hold good in 2010, that price needs to be revised. However, we feel that pending further deliberations, the government may adopt that (earlier) price," said Sarma, explaining the need for revised recommendations.

Sarma, who was addressing an Assocham meeting on mobile value added services (MVAS), also stated that the regulatory body would be releasing a consultation paper on 4G towards the middle of the year. The 4G would provide for much close integration of telecom networks and much faster data speeds than what is possible with the 3G. India has been late in adapting to the 3G but hopes to catch up with the rest of the world by reducing the time in moving from 3G to 4G.

The top losers on the BSE sectoral front were Capital Goods (CG) down 1.20%, Information Technology (IT) down 1.18%, Oil & Gas down 1.15%, TECk down 0.87% and Consumer Durables down 0.72%.

On the flip side, Metal up 1.78%, Realty up 1.66%, Auto up 0.10% and Bankex up 0.04% were the major gainers in the BSE sectoral indices.

Having put behind the impact of global financial crisis, the Indian aviation industry is currently witnessing the best time it ever saw. This is reflected in the fact that in the month of December, local carriers for the first time in the history of Indian aviation carried more than 50 lakh passengers in a single month.

The official data released by the Directorate General of Civil Aviation (DGCA) show that airlines carried 52.13 lakh in December, up from 44.87 lakh passengers in the same period of the previous year, reporting a growth of almost 16%. Although the growth is slower than what was seen in the early months of the calendar year 2010, it is not expected since the base from last year has been rising.

Looking at the cumulative figures, during the calendar year 2010 the domestic airlines carried 520.21 lakhs as compared to 438.40 lakhs in 2009, again showing a growth of over 16%. The fourth quarter of 2010 registered 147.05 lakh passengers, up from 134.78 lakh in April-June, 2010, 119.84 lakh in July-September and 118.54 lakh in January-March quarter. Clearly, there has been continuous improvement in the demand side of aviation industry in each quarter of 2010.

Further, while Jet Airways (together with Jet Lite) retained its dominance with a market share of 25.4%, budget carriers are looking to increasingly challenge the full-service carriers. Indigo flew 9.71 lakh passengers in December 2010 taking the third spot just marginally behind the Kingfisher which managed to just hold on to the second spot with 9.72 lakh. The two airlines together carried 37.2% of all fliers on the domestic routes. The state-owned Air India on the other hand slipped to the fourth spot managing to get just 17.1% of the total market or 8.9 lakh passengers.

In terms of seat factors also the budget carriers ruled the market showing much higher occupancy rates compared with their full-service counterparts. Spice Jet recorded an occupancy rate of 87.8% followed closely by Go Air at 87% and Jet lite at 84.8%. Among the full service airlines, Air India managed just 78.8% load factors while Jet Airways recorded 80.1% and Kingfisher Airlines scored 85.9% (together with its low cost subsidiary).

The S&P CNX Nifty touched a high and a low of 5747.65 and 5662.55, respectively.

The top gainers on the Nifty were SAIL up 5.25%, HCL Tech up 5.17%, DLF up 4.02%, Sterlite Inds up 3.55% and Sesa Goa up 3.31%.

The top losers on the index were Ambuja Cement down 2.71%, Suzlon Energy down 2.35%, GAIL down 2.35%, Infosys down 2.32% and SBI down 1.82%.

European markets were trading in the red on Wednesday. France's CAC 40 plunged 0.16%, Germany's DAX slipped 0.02% and Britain's FTSE 100 shed 0.39%.

Most of the Asian equity indices finished the day's trade in the positive terrain on Wednesday as US earnings beat analyst estimation. Apple Inc. reported quarterly net income of $6.43 a share, compared with $5.41 a share estimated on average by analysts. The sentiments in the region also got boost over hopes that China's steps to slow inflation won't curb its economic expansion. Chinese Shanghai Composite gained most in the trade and snapped the session with a gain of more than one and a half percent as bargain hunters swooped on coal miners and high-speed railway equipment makers gained due to their upbeat earnings outlook.

Asian Indices	Last Trade	Change in Points	Change in %
Shanghai Composite	2,759.26	50.28	1.86
Hang Seng	24,419.62	265.64	1.10
Jakarta Composite	3,517.27	-31.37	-0.88
KLSE Composite	1,566.51	-3.53	-0.22
Nikkei 225	10,557.10	38.12	0.36
Straits Times	3,241.96	-7.62	-0.23
Seoul Composite	2,115.69	19.21	0.92
Taiwan Weighted	8,086.02	63.87	0.71

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