Markets back into the green on positive global cues

After falling in late morning session, markets are moving upwards in mid-afternoon trades, though they are trading in a narrow band amid alternate bouts of buying and selling. Positive cues from the global front are helping the market to move further as Asian markets are trading mostly in the green and the US index futures are also showing an up-tick in screen trade. Back home, the BSE Sensex and the NSE Nifty have maintained their crucial psychological levels of 19,000 and 5,700 levels. Currently, stocks from the metal, public sector undertakings and banking spaces are leading the pack of gainers, while those from the capital goods and information technology spaces are amongst the under performers. Total traded volume at this point of time stood at around Rs 61,000 crore. The broader markets are out-performing the BSE benchmark. The BSE Mid-cap and Small-cap indices are trading higher by 0.76% each as against the Sensex gain of 0.26%. The market breadth on the BSE was strong and in favour of advances; the gainers outpaced the losers in a ratio of 1759:924 while 110 scrips were unchanged. Meanwhile, UPA government in the evening today will be reshuffling its Union cabinet in order to clean-up the image and improve the performance of the government. The reshuffle was necessitated because of vacancies created on account of exit and resignation of various ministers. The cabinet is likely to see addition of more new and young faces and removal of non-performers.

The BSE Sensex advanced 50.13 points or 0.26% at 19,142.18. The index touched a high and a low of 19,167.06 and 19,047.96, respectively.

The BSE Mid-cap and Small-cap indices gained 0.76% each. 

Metal up 2.33%, Public Sector Undertakings (PSU) up 0.75%, Bankex up 0.66%, Realty up 0.59% and Oil & Gas up 0.54% were the major gainers in the BSE sectoral indices.

On the flip side, Capital Goods (CG) down 0.95%, Information Technology (IT) down 0.58% and TECk down 0.25% were the only losers on the BSE sectoral front.

Meanwhile, mobile phone subscribers in the country will finally be able to easily avail the much awaited Mobile Number Portability (MNP) service that will allow them to change their telecom operator or the services provider while still retaining their current phone numbers from January 20.  The MNP has already been launched in Haryana from Nov 20 but rest of the country has still been awaiting the services.

Now, according to a notification issued by the Telecom Regulatory Authority of India (TRAI), the MNP would come into force all over the country from January 20. "The authority in exercise of powers conferred by clause (b) of sub regulation (2) of the Telecommunications Mobile Number Portability... and for ensuring compliance with the terms and conditions of the license and for protecting the interests of the consumers of the telecom sector hereby directs that MNP shall come into force in all telecom service areas in the country from January 20, 2011" reads a notification by the TRAI.

Although experience has been different with MNP in different countries, in India the services are likely to be hotly used by consumers. The low porting charges to be paid by the subscriber, which are capped at present at Rs 19 per porting, and low porting time at 7 days for all circles except Jammu & Kashmir, Assam and North East where the maximum time period for completing the porting process is 15 days, will drive rapid adoption of MNP in India.

Analysts believe that the introduction of the MNP services could be a game-changer for the telecom industry as the importance of customer retention will increase all the more. Although churning rates have already increased over last one year ever since the price based competition intensified in 2009, the option of having same number with another operator will further boost the number of customers changing their operators.

The development will therefore quite certainly have some significant impact on the telecom operators' revenue and analysts have been projecting that MNP may lead to decline in the average revenues per user (ARPUs) between 2-5%. The decline will come from an increase in subscriber acquisition and retention costs. In such a scenario, operators with stronger financial profile would be better placed to cope with the increasing competitive intensity.

The top gainers on the Sensex were Sterlite Inds up 3.75%, Rel Infra up 3.48%, Hindalco Inds up 3%, M&M up 2.14% and ICICI Bank up 1.92%.

L&T down 1.75%, Infosys down 1.15%, HDFC Bank down 0.79%, SBI down 0.73% and BHEL down 0.45%, were the top losers on the index.

Riding on the strong buoyancy seen in the Indian economy, the government is likely to end up earning more revenue than what it has budgeted, particularly in the direct tax space. Indian economy has grown at 8.9% pace in the first half of the current financial year that ends on March 31 compared with earlier expectations of 8-8.5% growth.

Riding on the strong growth, tax collections too have been robust. During the April-November 2010 period the direct tax collections have risen nearly 18% to Rs 2.16 lakh crore compared with the level achieved a year ago. As things stand now, government is definitely likely to breach the target. In order to meet the budgeted revenue collections, 14% year-on-year growth in collections will be needed. Current rate of growth is higher than what is needed and therefore the expected outperformance.

With the current growth ahead of the budgeted growth, the Central Board of Direct Taxes (CBDT) is hoping to greater revenue this fiscal. 'We are hoping to exceed the budgeted target for net direct tax collections this fiscal,' said Sudhir Chandra, chairman of the CBDT. According to the estimates of finance ministry, total direct tax collections in the current fiscal may reach Rs 4.5 lakh crore as against the budgetary estimate of Rs 4.3 lakh crore.

The government budgeted target of direct tax collections at Rs 4.3 lakh crore represents more than half of its total tax revenue target of Rs 7.45 lakh crore. At the start of the fiscal, there were apprehensions that the high tax revenue target might not be met in wake of economic uncertainty. However, these apprehensions have proved false and the country is growing close to the trajectory seen in 3-4 pre-crisis years.

The S&P CNX Nifty rose 14.50 points or 0.25% to 5738.55. The index touched a high and a low of 5747.65 and 5708.65, respectively. 

The top gainers on the Nifty were SAIL up 4.63%, HCL Tech up 4.35%, Sterlite Inds up 3.81%, Rel Infra up 3.73% and Hindalco Inds up 3.29%.

The top losers on the index were L&T down 1.80%, ACC down 1.77%, GAIL down 1.73%, Sun Phrama down 1.42% and Infosys down 1.40%.

Other Asian markets are mostly trading in the positive zone at this point of time. Shanghai Composite zoomed 1.84%, Hang Seng advanced 0.93%, Nikkei 225 surged 0.36%, Seoul Composite added 0.92% and Taiwan Weighted zoomed 0.71%. 

On the flip side, Jakarta Composite declined 0.62%, KLSE Composite dipped 0.31% and Straits Times was flat.

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