Markets once again slip into red after initial upmove

The Indian equity markets don't seem to be getting any respite from their repeated pounding and what appeared in the initial trade, a faint sign of recovery, vanished within minutes and the markets have again dipped into red. The global cues too were not very supportive as the US markets closed mixed overnight while the Asian markets made a weak start. Back home, the realty and infra stocks which were expected to go for some recovery are again languishing at the bottom, only the power sector stocks are powering ahead otherwise all the sectors are still grappling in red with no sign of any recovery. Auto sector too is slightly in somber mood despite the industry body announcing that vehicle sales in India hit an all-time high in January, the car sales in India rose 26.3 percent in January while, sales of trucks and buses, a key pointer to economic activity, rose 12.6 percent. The main concern of the markets is the rising inflation so the market men will be closely watching the weekly inflation numbers to be announced later in the day.  On the same time 2G scam continue to haunt the markets and the telecom stocks are seen impacted by the latest ruling of the Telecom Regulatory Authority of India (TRAI). In line with CAG's findings on the 2G spectrum scam, telecom regulator TRAI has recommended a whopping over six-fold jump in 2G spectrum cost for operators, a move that may make mobile services costlier. The TRAI has recommended Rs 10,972.45 crore for the contracted 6.2 Mhz spectrum for pan-India license as against Rs 1,658 crore being paid by the operators now. However, the battered down Anil Ambani group companies are showing some sign of recovery in the early trade.

The BSE Sensex opened at 17,603.29; just 10 points higher compared to its previous closing of 17,592.77, and has touched a high and low of 17,636.88 and 17,498.28 respectively. 

The index is currently trading at 17,525.51, down by 67.26 points or 0.38%. There were 10 stocks advancing against 20 declines on the index.

The overall market breadth has made a weak start with 28.41% stocks advancing against 68.35% declines. The broader indices continue to underperform the benchmarks; the BSE Mid cap and Small cap indices were down by 0.90% and 0.92% respectively.

Power was the lone gaining sector on the BSE, up by 0.35%.

On the other hand, Realty down by 3.33%, CD down by 1.65%, Metal down by 1.27%, TECk down by 1.04% and IT down by 0.80%, were the major losers on the index.

The top gainers on the BSE were, Reliance Infra up by 7.93%, RCom up by 3.48%, JP Associates up by 2.70%, ITC up by 1.92% and Hero Honda up by 1.87%.

SBI down by 2.50%, Sterlite Industries down by 2.50%, Cipla down by 1.96%, HDF down by 1.83% and Bharti Airtel down by 1.76% were the top losers on the index.

Meanwhile, India's defense industry, which has traditionally been a monopoly of the government with little role given to private sector, is now beginning to grow in the private hands as well. Traditionally, the only role given to the private players was that of a supplier of ancillary parts. However, with the country emerging as a super-power in making, the defense needs of India have been expanding and with a thriving high-tech industrial base in private hands, the government has been off-late putting emphasis on partnering the private companies on an equal footing.

While the private players in this space are very much eager to grab their share in the massive opportunity that India presents, they have been asking the government to take some important steps that will enhance the capability and capacity of domestic defense equipment space. The industry wants the government to come out with a well contoured defense procurement policy, clearly defined service quantitative requirements (SRQs) and hiking the foreign direct investment in defense to 49%.

The government has already put in place the policy an offset requirement which obligates foreign defense equipment suppliers to procure inputs worth a certain proportion of the total order from Indian companies. Such a policy however can be better utilized, if the Indian defense suppliers are allowed to acquire advanced technologies from foreign players.

Further, by increasing the FDI in defense sector to 49%, the government can give a boost of Indianisation of defense content. Since most of the advanced technologies currently available are intellectual properties of private foreign companies, when the Indian firms look to partner such companies, a reasonable equity has to be offered to them for parting with the sensitive technologies.

The S&P CNX Nifty opened at 5,246.05; about 7 points lower compared to its previous closing of 5253.55, and has touched a high and a low of 5,272.50 and 5,231.25 respectively. 

The index is currently trading at 5,238.45, down by 15.10 points or 0.29%. There were 26 stocks advancing against 23 declines, while one stock remained unchanged on the index.

The top gainers of the Nifty were Reliance Infra up by 8.29%, Reliance Capital up by 3.99%, Reliance Communication up by 3.28%, RPower up by 3.03% and SAIL was up by 2.45%.

The top losers of the index were Sterlite Inds down by 2.95%, Sesa Goa down by 2.12%, Bharti Airtel down by 1.91%, SBI down by 1.73% and Hindalco down by 1.64%.

All the Asian markets barring Shanghai composite were trading in the red; Nikkei 225 was down 7.24 points or 0.07% to 10,610.77, Hang Seng was down 166.89 points or 0.72% to 22,996.76, Jakarta Composite was down 66.90 points or 1.96% to 3,350.11, KLSE Composite was down 15.45 points or 1.01% to 1,520.62, Straits Times was down 27.35 points or 0.87% to 3,123.21 and Seoul Composite was down 20.11 points or 1.01% to 2,025.23.

On the flip side, Shanghai Composite was up 21.73 points or 0.78% to 2795.80.

Unit-8, 3rd Floor, First Mall, The Mall, Ludhiana-141001, Punjab (INDIA).

To unsubscribe or change subscriber options visit: http://www.aweber.com/z/r/?TJzsLEwstCyc7OysHMyctEa0nAzMrIzsnA==