Markets continue to trade in negative terrain;food inflation surges to 18.32%

The local equity markets continue to trade in negative terrain in the late-morning session on the back of disappointing food inflation data. The weekly food price inflation stood at 18.32% during the week-ended December 25, 2010, compared to 14.44% in the previous week. At the same time, the regional peers too were not showing any sign of recovery and were trading on a mixed note and the Dow future was showing down tick in the screen trade.  Back home, on the sectoral front, software, technology and Power counters were the top gainers in trade; on the other hand reality, capital goods auto, metal and FMCG counters were the major losers on the BSE. Meanwhile fertilizers stock like Chambal fertilizers and Nagarjuna fertilizers were down  by 5% each as the government has deferred a decision on the urea price decontrol till the start of next fiscal. This development came after the Group of Ministers (GoM), including Union agriculture minister Sharad Pawar, oil minister Murli Deora and planning commission deputy chairman Montek Singh Ahluwalia met and probably decided that inflation was too high for raising urea prices that would be necessary to implement even a partial deregulation of the commodity. Back on street, the broader indices were also trading in negative terrain. The market breadth on the BSE was negative; there were 1439 shares on the loser's side against 1064 shares on the gainers side, while 113 shares were unchanged. The S&P CNX Nifty may face resistance around 6148, 6180 and 6242 levels whereas support will be around 6048 and 6020 mark for the day.

The BSE Sensex shed 59.29 points or 0.29% at 20,241.81.09. The index touched a high and a low of 20,425.82 and 20,196.40, respectively.

The BSE Mid-cap index and Small-cap index were down by 0.47% and 0.14% respectively.

The main losers in the BSE sectoral space were Reality 0.91%, Capital Goods down by 0.83% Auto down by 0.83% Metal down by 0.61% and FMCG down by 0.60%.

On the other hand,  TEcK up 0.22%, IT up 0.16%, Consumer  Durables (CD) up 0.12% and Power up 0.05% were the only gainers in the BSE sectoral space.

The major gainers on the Sensex were  Bharti Airtel up 1.09%, HDFC Bank up 1.07% Reliance Communication up 0.96%, Reliance Infra up 0.86% and NTPC up 0.83%.

On the flip side,  Sterlite Industries down by 3.85% Bajaj Auto down by 3.18%,  Cipla down 2.13%, SBI down by 1.92% and ONGC down by 1.45% were the major losers in the BSE sectoral space.

In what would came as a major relief for the telecom operators, the government said on Wednesday that the security related issues that were impacting the launch of third generation (3G) services were nearly resolved and it would soon issue mew guidelines in this context.

'3G issue is almost resolved. Soon you will have new guidelines that will resolve the matter,' said the communications and IT minister Kapil Sibal. On Tuesday, union home minister P Chidambaram too had stated that while the telecom service providers needed to work out the modalities to provide interception facilities to the security agencies, it would not lead to much delay in launch of services and telcos could be allowed to rollout 3G services while interception process was still being put in place.

The department of telecommunications (DoT) had earlier asked telecom operators to defer the launch of the GenNext mobile services that are enabled with the 3G spectrum, including video calling and high speed mobile internet, until a suitable system of real time interception was found. While operators did provide interception, the same was not real time but with a lag, which was not acceptable to the security establishments.

The private operators and state run companies together paid Rs 67,000 crore to the government for 3G airwaves after an auction held in May 2010. In addition, companies have spent several hundreds of crores on erecting the infrastructure required for implementing the 3G architecture. In this wake, any delay in launch of services will hit the telecom operators hard and further worsen the financials which are already under stress owing to squeezing margins.

The S&P CNX Nifty trimmed 16.50 points or 0.27% to 6101.05. The index touched a high and a low of 6,116.15  and 6,051.70, respectively.

The top gainers on the Nifty were Sun Pharma  up 1.62% HCL tech up 1.61% Powergrid  up 1.53% , Bharti Airtel up 1.16% and Reliance Capital was up 1.13%.

The top losers on the index were Sterlite Industries down 4.11%, Bajaj Auto down 3.09% Ambuja Cements down 3.02%  , Cipla down 2.70%  and ACC  down 2.23%.

The other regional peers were trading mixed; Shanghai Composite shed 0.50%,Jakarta Composite declined 0.79%, Seoul Composite declined 0.28% and KLSE  composite declined  0.02%, whereas Hang Seng increased  by 0.04% Straits Times inched 0.08% Taiwan Weighted advanced 0.42% Nikkei surged 1.32%. 

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