Markets trade marginally higher;oil & gas leads

Local equity markets are trading marginally higher in late morning session showing some recovery from initial sell off. While selling pressure continued in selected realty and infra counters while broader markets were not showing any recovery, the BSE Mid-cap and Small-cap indices plunged 1.46% and 1.91%, respectively. Meanwhile, All the Asian markets were trading in the red. On the other hand US index futures were also showing mild losses in the screen trade. Back home, though in green, the benchmark indices are continuing to trade below key psychological levels. The Sensex was still trading below the 18,000 mark while the Nifty was below the 5,350 mark, its low of August 2010.Oil and Gas sector stocks are outperforming the market and in selected banking stocks too some bounce back is being witnessed on the back of buying interest from the investors as a bottom up approach strategy. Information technology stocks, which looked set for some up move, have seen some profit booking. Realty stocks continue to trade lower. Power, metal, FMCG and consumer durables stocks are also down. The overall breadth on the BSE was extremely weak with 1960 declines against 618 advances and 82 unchanged.

The BSE Sensex increased 9.69 points or 0.05% at 17,785.39. The index touched a high and a low of 17,864.32 and 17,593.79, respectively.

The BSE Mid-cap and Small-cap indices plunged 1.46% and 1.91%, respectively.

Majority of the BSE sectoral indices were trading in the red. Realty down 3.67%, Power down 1.76%, Metal down 1.19% , FMCG down  1.11% and Consumer Durables (CD) down 1.05% were the major losers. While Oil & Gas up 1.22%, Bankex up 0.38% and Health Care (HC) up 0.30% were the only gainers in BSE sectoral space.

The top gainers on the Sensex were M&M up 3.10%, HDFC up 2.39%, RIL up 1.90%,ICICI Bank up 1.67 % and HDFC Bank up 0.73%.

On the other hand, BHEL down 2.93%, Hindalco Industries down 2.58%, Reliance Communications down 2.21%, DLF down 2.05% and Bajaj Auto down 2.03% were the top losers on the index.

The telecom regulatory authority of India (TRAI) has submitted its revised recommendations for the pricing of excess second generation (2G) spectrum with the operators. The regulator has once again linked the price of such spectrum with the price discovered in the 3G auction held last year, which will have serious financial implications for telecom companies.

According to the latest recommendations, the spectrum with operators over and above the 6.2 MHz, which was contracted in the license, should be charged in proportion to prices discovered in the 3G auctions. Further, the operators will have to pay a onetime fee for using this spectrum for all the years they have held it. This can range over Rs 7,000 crore for government owned BSNL to around Rs 4,000 crore for Bharti.

Since the telecom ministry Kapil Sibal had said recently that the spectrum bundled with license for new operators who got licenses in 2008 will be restricted at 4.4 MHz, they will have to pay for spectrum more than this level in any circle. Although currently not many new operators hold excess spectrum in many circles, the low ceiling on start up spectrum will mean they will have to pay much higher money for additional spectrum which would be needed as the subscriber number grows.

The implications for the incumbent operators do not end just here. The licences of some of incumbent operators, including the market leader Bharti Airtel, will be coming for renewal after completing 20 years of initially allowed period in several circles. These operators will too now have to pay much higher prices for the spectrum which will hit costs sharply. Total implications for incumbent operators could be much higher in this wake as compared to just the onetime spectrum fee being asked by the TRAI.

The TRAI had earlier released 2G spectrum recommendations in May last year asking for all the operators to pay for the spectrum over and above 6.2MHz held in all circles in line with the 3G auction prices. Its recommendations however were dubbed biased and regressive by many major players in the industry and no final call the matter was taken.  Given that the new recommendations are not much different from the older ones, the ball will again be in the court of the department of telecommunications (DoT) and the cabinet committee on economic affairs (CCEA) to take a final decision.  

The S&P CNX Nifty surged 7.05 points or 0.13% to 5,319.60. The index touched a high and a low of 5,339.45 and 5,253.55, respectively. 

The top gainers of the Nifty were SunPharma up 2.64%, Kotak Bank up 4.79%, M&M up 3.37%, HDFC up 2.74% and Reliance Industries up 2.02%

The top losers of the index were BHEL down 2.87%, Rpower down 2.74%, Hindalco down 2.52%, ACC down 2.20% and Bajaj Auto down 2.19%.

All the Asian markets were trading in the red; Shanghai Composite plunked 0.70% , Hang Seng declined 0.64%, Jakarta Composite shed 1.63%, KLSE Composite trimmed 0.31%, Straits Times tumbled  1.32%, Seoul Composite plummeted  1.17% and Taiwan Weighted slipped  by1.15% and Nikkei 225 tanked by 0.17%.

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