Gains on Sensex, Nifty may be temporary: Wednesday Closing Report

As suggested yesterday, Nifty did get a support near 5,160 and a small rally ensued, but the gains may not be sustained

Yesterday we had mentioned that the Nifty will enjoy a small rally but is headed down towards its first support at 5,160 and then at 5,075. Today the index almost reached the first level of support by touching 5,169. A recovery in the post-noon session helped the market close in the green. We still maintain that the Nifty is headed down. The National Stock Exchange witnessed a volume of 53.68 crore shares.


The market opened flat with a positive bias taking cues from its Asian peers which were mixed in morning trade. While US Fed chief Ben Bernanke painted a gloomy picture of the US economy, he reiterated that he would look at alternatives if the employment situation doesn’t improve. The Nifty opened six points higher at 5,199 and the Sensex rose eight points to start the day at 17,113.


Unable to sustain the positive opening, the indices soon moved lower and fell to the day’s low at around 11.10am with the Nifty going down to 5,169 and the Sensex retracting to 17,039. However, bargain hunting at lower levels helped the indices move into the green in noon trade. But volatility and selling pressure capped the gains.


The benchmarks gained momentum in the post noon session on support from metal, realty and capital goods sectors, and a positive opening of the European markets.


The gains continued in subsequent trade with the indices hitting their highs at around 2.25pm. At this point, the Nifty touched 5,223 and the Sensex scaling 17,205.


The market closed near the highs mainly on gains in index stocks, with the Nifty snapping its five-day losing streak. The Nifty gained 23 points to 5,216 and the Sensex settled at 17,185, up 80 points.


The advance-decline ratio on the NSE was in favour of the losers at 808:843.


Among the broader indices, the BSE Mid-cap index gained 0.53% and the BSE Small-cap index rose 0.29%.


The top sectoral indices were BSE Metal (up 1.48%); BSE Capital Goods (up 1.07%); BSE Realty (up 0.93%); BSE Auto (up 0.59%) and BSE Power (up 0.51%). The losers were BSE Oil & Gas, BSE Healthcare (down 0.22%); BSE Consumer Durables (down 0.11%) and BSE Fast Moving Consumer Durables (down 0.02%).


The main performers on the Sensex were Bajaj Auto (up 5.20%); Tata Power (up 2.71%); Jindal Steel (up 2.67%); Sterlite Industries (up 2.43%) and Maruti Suzuki (up 2.31%). The key losers were Tata Motors (down 1.93%); Dr Reddy’s Laboratories (down 1.85%); NTPC (down 0.79%); State Bank of India (down 0.59%) and Cipla (down 0.56%).


The top two A Group gainers on the BSE were—Pantaloon Retail (up 6.83%) and Financial Technologies (up 6.03%).

The top two A Group losers on the BSE were—Union Bank of India (down 3.01%) and Punjab National Bank (down 2.79%).


The top two B Group gainers on the BSE were—Decolight Ceramics (up 20%) and Filatex Fashions (up 19.73%).

The top two B Group losers on the BSE were—NU-Tech Corporate Services (down 19.29%) and Cochin Minerals & Rutile (down 16.87%).


The toppers on the Nifty were Bajaj Auto (up 5.32%); Tata Power (up 3.34%); Sesa Goa (up 2.91%); Jindal Steel and Maruti Suzuki ((up 2.71% each). Punjab National Bank (down 2.98%); Tata Motors, Bank of Baroda (down 1.95% each); Dr Reddy’s Labs (down 1.91%) and Ranbaxy Laboratories (down 1.06%) were the top five losers on the index.


The Asian pack closed mixed as Chinese premier Wen Jiabao on Tuesday said that the government will implement a more ‘proactive’ labour policy as the situation is likely to face pressures, going ahead. Meanwhile, South Korean authorities are reportedly investigating the country’s top four banks for allegedly setting three-month certificate of deposit (CD) rates.


The Shanghai Composite gained 0.37%; the Jakarta Composite added 0.02%; the KLSE Composite rose 0.36% and the Straits Times settled 0.08% higher. On the other hand, the Hang Seng contracted 1.11%; the Nikkei 225 fell 0.32%; the KOSPI Composite tanked 1.48% and the Taiwan Weighted dropped 1.09%.


At the time of writing, the key European indices were up between 0.09% and 0.64% while the US stock futures were in the negative.


Back home, foreign institutional investors were net buyers of shares totalling Rs474.95 crore while domestic institutional investors were net sellers of stocks worth Rs266.21 crore.


Fitch Ratings has upgraded Ansal Housing and Construction’s long-term rating to ‘stable’. The upgrade reflects regular servicing of term loans by the company over the last six months, the rating agency said.


The agency also noted that there are limited construction-related risks in the company’s ongoing projects as a majority of the land under development (around 55%) would be sold as plots. The stock slipped 0.11% to close at Rs44.85 on the NSE.


Pune-based diversified finance company Bajaj Finserv will be raising Rs1,000 crore by December, mainly to participate in the proposed capital raising plan of its non-banking lending subsidiary. The money will be raised through a rights issue. The stock jumped 4.55% to close at Rs712 on the NSE.


FMCG firm Jyothy Laboratories said it has allotted a bonus share to its shareholders in the ratio of 1:1 to the company’s shareholders. Jyothy Laboratories has allotted little over 8.06 crore shares of Re1 each. The stock declined 0.67% to settle at Rs125.85 on the NSE.



EGoM decides on roll-out obligations for telcos

Under the new proposal, for those who acquire fresh spectrum, the roll-out obligations would be to cover 10% of the blocks in the third year, 20% of the blocks in the fourth year and 30% of the blocks in the fifth year

New Delhi: A high powered ministerial panel headed by Home Minister P Chidambaram on Wednesday decided to make it mandatory for telecom operators who will get spectrum through auction to roll-out services in 30% of block level headquarters in five years, reports PTI.
The Empowered Group of Ministers (EGoM) also discussed the pricing of spectrum which as per the Supreme Court mandated deadline has to be auctioned by 31st August.
However, no decision was taken and the panel is likely to meet again on Friday.
"Under the new proposal, for those who acquire fresh spectrum... the roll-out obligations would be to cover 10% of the blocks in the third year, 20% of the blocks in the fourth year and 30% of the blocks in the fifth year," Telecom Minister Kapil Sibal told reporters.
He added the obligations apply to both existing and new players. As per existing norms, operators have to cover 10% of the district head quarters within first year of allotment of spectrum.
Earlier, Telecom Regulatory Authority of India (TRAI) had recommended that operators should cover 50% of villages having population of over 2,000 people in three years and 100% in four years from the date spectrum is allocated to them.
The TRAI proposal was criticised by industry with Norwegian firm Telenor even saying it would quit if network roll-out recommendation is approved.
Although the EGoM discussed the issue of spectrum usage charge and reserve price, no decision was taken.
"There was a discussion on two issues namely the spectrum usage charges and the reserve price... it will be continued on Friday morning when the group will meet again," Sibal added.
Sibal was asked whether the Department of Telecom (DoT) has been told to prepare a matrix of spectrum reserve price and its likely impact on tariffs and revenue to government.
The Minister said: "There are ongoing discussions that are taking place and hopefully a final view will be evolved after full discussion on Friday if possible".
Sources said DoT has been asked to prepare a matrix of various levels of reserve price and spectrum usage charge at every Rs1,000 crore difference in descending order and the impact it would have on tariffs for end-consumer and the revenue accrued to the government.
The same is to be presented to the EGoM in its next meeting scheduled for 20th July. The staggered payment option for telecom operators will also be discussed in this meet, sources said.
The inter-ministerial panel, the Telecom Commission did not favour staggered payment option.
Sectoral regulator Trai had recommended a minimum reserve price of over Rs3,622 crore for auction of one Mhz of spectrum in the 1800 Mhz band, amounting to over Rs18,000 crore for a pan-Indian operations in case of a new entrant, for 5 Mhz.


Government looking at LPG subsidy cut, partial decontrol of diesel

The government is close to taking a decision on capping the number of subsidised LPG cylinders to 'econonomically not weaker' and also looking at partial decontrol of diesel prices

Bangalore: The Union government is close to taking a decision on capping the number of subsidised LPG cylinders to 'econonomically not weaker' sections to bring down the subsidies by up to Rs10,000 crore annually, Minister of State for Petroleum and Natural Gas RPN Singh said on Wednesday, reports PTI.
The government is also looking at partial decontrol of diesel, he said.
Singh said the government gives Rs36,000 crore in subsidy on LPG and a lot of people who are 'not economically weaker sections' and don't require them, take benefit, adding, the government is looking at reducing the subsidy on LPG by capping the amount (number) of cylinders given on subsidy.
Stating that the government is in an advanced stage of taking a decision on reducing LPG subsidies, he told reporters on the sidelines of a function: "If we cap some cylinders, which do not infringe on the right of poor people who get subsidies, I think we can save Rs8,000 crore to Rs10,000 crore just by capping the cylinders for the rich (restricting the number of subsidised cylinders for economically not weaker sections).
But he sounded cautious on the issue of raising prices of diesel, saying its a very delicate issue.
"If you try to raise the prices of diesel, it has a cascading effect on the economy. We are trying to work out a solution where it impacts the economy in the least manner but also brings down the fiscal deficit", Singh said.
The Minister, who earlier inaugurated the 17th refinery technology meet jointly organised by Centre for High Technology and Hindustan Petroleum Corp Ltd, ruled out absolute decontrol of diesel in the near term.
"It's extremely difficult for us to absolutely decontrol diesel at the moment because it would impact the economy in a very, very serious manner," he said, but added that the government is looking at partial decontrol of diesel so that the impact on the people would be of "reduced magnitude".
He recalled that diesel was decontrolled in 2010 but the measure has not been implemented as the price of crude oil started rising.
Singh said the state-run oil marketing companies are bleeding and are having a "terrible time" because of the subsidy burden. The government wants to bring down the subsidies on kerosene, LPG and diesel in a way that does not impact the people in a major manner and takes away subsidies from people who do not deserve them.
On prices of petrol, the Minister said his personal opinion is that it should be like in the US, where petrol prices change every day, and different companies have different prices.


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