Markets recoup some losses; December inflation surges to 8.43%

Key benchmark indices though have recouped some of their losses but are still trading in the red tracking weak global cues as most of the Asian markets are trading in the negative zone. Meanwhile, India's headline inflation rose sharply to 8.43% in the month of December against 7.48% in the previous month, the reason being rise in food prices. The figure is slightly above the market expectations of 8.3%, putting pressure on the rate sensitives. All the rate sensitive sectors are under pressure since last one month on the back of surging inflation; and the concern of rate hike by RBI to curb this surge is costing too much to the markets. In the BSE sectoral space, Information Technology, Consumer Durables and Technology counters witnessed maximum traction and helped the key indices put a ceiling on the losses. On the flip side, Metal, Auto, Capital Goods and Realty segments are the major losers in the sectoral space. The broader indices also remain more or less subdued in trade today. The BSE Mid cap index dropped 0.06%, while the BSE Small cap index rose 0.17%. The market breadth, indicating the health of the market, was neutral. There were 1266 shares on the gaining side and 1263 shares on the losing side, while 114 shares remained unchanged.

The BSE Sensex is currently trading at 19,166.73, down by 16.09 points or 0.08%. There were 15 stocks advancing against 15 declines on the index.

The broader indices were trading on a flat note; the BSE Mid cap index dropped down by 0.06% while Small cap index rose 0.17%.

Information Technology up by 0.93%, Consumer Durables up by 0.77% and TECk up by 0.71%, Healthcare up 0.61% and FMCG up 0.34% were the top gainers on sectoral space on the BSE. While, Metal down by 1.24%, Auto down by 0.93%, Capital Goods down by 0.85%, Realty down by 0.84%, and PSU down by 0.22%, were the prominent losers on the index.

The top gainers on the Sensex were RCom up by 2.06%, Wipro up by 2.02%, HUL up by 1.98%, Cipla up by 1.60% and M&M was up by 1.07%.

Tata Motors down by 2.73%, Tata Steel down by 2.11%, L&T down by 1.70%, HDFC down by 1.30% and Bajaj Auto down by 1.14% were the top losers on the index.

Meanwhile, in a significant development for telecom operators, the government after a month-long wait gave the go-ahead to launch 3G video calling services. Operators however will have to give an undertaking that suitable monitoring mechanism, which allows security agencies to snoop into all 3G services, will be put in place by July 31, failing which services will have to be withdrawn.

The department of telecommunications (DoT) had earlier asked telecom operators to defer the launch of the high-end 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.

Following the issue, the operators had several rounds of discussions with officials of the telecom and home ministries to find a solution. Telcos offered several alternatives, including a promise to put in place a suitable mechanism that would allow real time interception at a later stage. The government has now agreed to the proposal of telcos of providing a real time interception by middle of the year and services can be started in the meantime.

"After examining various options, it has now been decided to permit carriage of calls on mobile networks subject to an undertaking being provided by the concerned service providers that they shall demonstrate the required capability by July 31, 2011," the DoT said in a statement. Union Home Minister P Chidambaram had said recently that security agencies did not want to delay the launch of 3G services, they just wanted their concerns to be addressed and services would be allowed to begin immediately.

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 crore on erecting the infrastructure required for implementing the 3G architecture. All the operators who spent on 3G are hoping that it would turn out to be a fresh revenue stream and will help lower the pressure on margins that has been witnessed for last 4-6 quarters.

The S&P CNX Nifty is currently trading at 5,745.00, down by 6.90 points or 0.12%. There were 25 stocks advancing against 25 declines on the index.

The top gainers of the Nifty were Wipro up by 2.52%, Ranbaxy up by 2.47%, HCL Technologies up by 2.33%, HUL up by 2.18% and Reliance Communication was up by 2.09%.

The top losers of the index were SAIL down by 5.22%, Tata Motors down by 2.32%, Axis Bank down by 2.16%, Ambuja Cement down by 1.89% and Sesa Goa was down by 1.81%.

Asian markets were trading mostly in the red; Shanghai Composite was down 1.25%, Jakarta Composite declined 1.12%, KLSE Composite shed 0.17%, Nikkei 225 trimmed down by 0.86%, Straits Times dropped 0.77% and Taiwan Weighted slid 0.03%.

On the flip side, Hang Seng up by 0.24% and Seoul Composite up by 0.89% were the only gainers in the Asian pack.

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