Share prices may see more gains: Friday Closing Report

If the upmove continues, the Nifty may reach 5,210

Institutional buying in the second half of the session enabled the market to close in the positive, despite headline inflation for September hovering near the double-digit mark for the 10 month in succession. Yesterday, we had mentioned that the Nifty is ranged between 5,060 and 5,130. The index opened close to 5,060 and ended a little above 5,130. If the upmove continues, the Nifty may reach 5,210. The NSE (National Stock Exchange) saw a volume of 56.65 crore shares.

The market opened flat, tracking its Asian peers which were subdued in morning trade following reports that Standard & Poor’s had cut Spain’s long-term rating by one notch. Nervousness ahead of the release of India’s inflation figures for September also kept investors on the sidelines. The Nifty opened 21 points lower at 5,057 and the Sensex started the day at 16,837, down 47 points from its previous close. The opening figure was the intraday low for the Nifty, while the Sensex dipped to the day’s low in initial trade with the index at 16,828.

A minor recovery in healthcare, IT, consumer durables and oil & gas sector stocks helped the market trade in the positive zone. Unable to hold on to the initial gains, the indices slipped into the negative just before 10am. The indices sprang back into the green a short while later on institutional buying in select stocks.

Choppy trade continued with the market almost touching its previous close in the post-noon session on fears that the Reserve Bank of India may hike interest rates yet again in its quarterly policy review later this month as inflation continues to hover near the double-digit mark for 10 months in a row.

The market hit its intraday high in the last half hour with the Nifty rising to 5,141 and the Sensex scaling 17,112. The closing was a tad below those levels as the Nifty added 54 points to 5,132 and the Sensex rose to 17,083, a gain of 199 points.

The advance-decline ratio on the NSE was almost equal at 902:820.

Among the broader indices, the BSE Mid-cap index gained 0.55% and the BSE Small-cap index rose 0.31%.

BSE IT, BSE TECk (up 2.61% each), BSE Oil & Gas (up 1.53%), BSE Fast Moving Consumer Goods (up 1.09%) and BSE Auto (up 0.99%) were the top sectoral gainers. The losers were BSE Realty (down 1.36%), BSE Metal (down 0.56%), BSE Capital Goods (down 0.47%) and BSE PSU (down 0.37%).

The Sensex toppers were Jindal Steel (up 5.01%), TCS (up 4.01%), Wipro (up 3.98%), Bharti Airtel (up 3.76%) and Bajaj Auto (up 2.85%). Coal India (down 2.91%), Tata Steel (down 2.84%), DLF (down 2.68%), Maruti Suzuki (down2.65%) and Larsen & Toubro (down 0.74%) settled at the bottom of the index.

The key performers on the Nifty were Jindal Steel (up 5.36%), Wipro (up 3.98%), TCS (up 3.87%), Bharti Airtel (up 3.81%) and IDFC (up 3.57%). The major losers on the index were Sesa Goa (down 4.41%), Tata Steel (down 3.57%), DLF (down 3.02%), Coal India (down 2.94%) and Maruti Suzuki (down 2.72%).

Markets in Asia closed mostly lower as Chinese consumer inflation for September remained above the 6% mark at 6.1%. S&P’s downgrade of Spain’s long-term credit rating by one notch also weighed on investors’ sentiments.

The Shanghai Composite fell 0.30%; the Hang Seng declined 1.36%; the Jakarta Composite lost 0.29%; the KLSE Composite slipped 0.17%; the Nikkei 225 fell 0.85% and the Taiwan Weighted closed 0.95% lower. On the other hand, the Straits Times rose 0.37% and the Seoul Composite gained 0.67%.

Back home, foreign institutional investors were net buyers of stocks worth Rs670.08 crore on Thursday while domestic institutional investors were net sellers of shares worth Rs257.36 crore.

Tensions ran high at Maruti Suzuki India’s Manesar plant on Friday with about 1,500 police personnel entering the factory and asking the striking workers to vacate the premises as per the Punjab and Haryana High Court order. The workers, however, said they will not leave the factory unless forcibly evicted. The stock declined 2.72% to settle at Rs1029.50 on the NSE.

Nectar Lifesciences has received European approval for its Cephalosporin APIs manufacturing facility at Derabassi in Punjab. The certificate is accepted by all European Union health authorities besides several other countries, the company said. The stock soared 11.89% to close at Rs24 on the NSE.

The Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs5 lakh on retail major Pantaloon for failing to address investor grievances within the stipulated timeframe. SEBI had earlier identified the Kishore Biyani-promoted firm as one of the companies against whom a large number of investor grievances were pending for more than six months as on 30th June last year. Despite the development, the stock gained 1.16% to close at Rs196.80 on the NSE.


Digitisation will give cable TV industry a big boost

The Union Cabinet has approved an ordinance for mandatory digitisation of TV cable networks across the country. This move has the potential to brighten the prospects for the industry

The Union Cabinet has come out with an ordinance for mandatory digitisation of TV cable networks across the country. The industry, which was entangled in thorny issues among various stakeholders like cost-sharing and implementation, can now hope for better days ahead. Earlier in February, the Ministry of Information and Broadcasting (I&B), while accepting the recommendations made by TRAI (the Telecom Regulatory Authority of India), deferred the timeline to March 2015 from December 2013 for digitisation. In August 2010, TRAI had recommended implementing the complete digitisation of the cable TV network, or complete switchover from analogue to digital telecast by December 2013—in four phases.

“We believe that the regulatory trigger will change the TV distribution industry dynamics from here on. Our sense is that while both multi-service operators (MSOs) as well as direct-to-home (DTH) players will capitalise on the mandatory digitised environment, the delta gains will be far sharper for nationalised MSOs such as DEN and Hathway. Against a backdrop of extremely poor execution and muted subscriber addition of less than 0.5 million subscribers annually, we now foresee a near 3x jump in digital subscriber addition for these MSOs in the next 12-18 months,” said IDFC Securities Ltd in a research report.

Currently, the television distribution network in India caters to around 140 million television homes, over 60% of these in the analogue category, while digital cable service is fed to a measly number of 4.5 million television homes. There are around 50,000 local cable operators (LCOs) and 1,000 MSOs, about 10 of these are major MSOs.

While TRAI wanted digitisation to be implemented in four phases, broadcasters and distributors, including MSOs and LCOs expected the government to issue an order for the immediate implementation of digitisation of cable TV.

According to the ordinance passed by the Cabinet, the schedule sets 31 March 2012 as the sunset date for analogue cable TV for services in the four metros and 31 December 2014 as the sunset date for the entire country. On these dates, analogue cable services will be completely switched off from the respective areas, ensuring compliance by all industry participants.

With the ordinance now approved, the I&B Ministry would be able to insert a clause in the Cable Act, which would make a digital addressable system mandatory in the cable sector. The Ordinance will be sent to the President through the Law Ministry for final signature and then within six months, it will be ratified by Parliament.

Over the past few years, while the regulator and all players from the cable TV industry wanted to go the digital way, broadcasters, MSOs and LCOs were at loggerheads, as each one wanted the other party to bear the cost for digitisation.

Earlier in March, while speaking at FICCI-FRAMES 2011, Aroon Purie, chairman and editor-in-chief, India Today group, said, “Broadcasters are spending huge money on carriage fees, content generation and talent, why then don’t we get our right share in the subscription amount collected by cable TV operators? Going forward, I think, digitisation will help increasing bandwidth, remove carriage fees and bring accountability and transparency in this business.”  

In the absence of an addressable system, the subscription revenue transaction between the broadcasters, MSOs and LCOs is undertaken either on a fixed-fee basis or on the basis of a negotiated subscriber base. Considering the strong bargaining power enjoyed by LCOs who own the last mile connectivity, the distribution of subscription revenue in effect remains heavily skewed in their favour. According to estimates, LCOs declare only around 15% of their paid connectivity to MSOs and broadcasters.

This not only deprives the MSOs and broadcasters of their fair share of value, but also results in service tax leakage for the government. The lack of trust and transparency in the business models of the industry has also led to frequent disputes between stakeholders and increased litigation incidences.

“Digitisation brings in fair reporting of subscriber base, leading to standard pricing and will help do away with local monopoly. Digitisation will also increase the subscription revenues for operators and reduce the carriage fee for broadcasters in a phased manner and should help margins in the long term,” said Tarun Katial, chief executive, Reliance Broadcast Network Ltd.

The reason for the ‘lack of action’ among MSOs such as DEN and Hathway was apparent— players had limited access to capital, so even if they went ahead and aggressively digitised (at say, 100% subsidy) they were unlikely to get any returns on that capital (as digitisation without addressability would not lead to imminent monetisation). Thus, players had limited ‘incentive’ to ramp up aggressively and they pulled back on their aggressive expansion plans. The regulatory mandate had become imperative to transform the industry.

“With digitisation now mandated by the government, there is strong visibility on digital subscriber growth coupled with monetisation. LCOs, which had limited incentive to digitise their subscriber base, will now be compelled to spur digitisation. With limited access to capital as also ability to digitise their own network, LCOs are now bound to collaborate with MSOs. This, coupled with digitisation with addressability, will resolve the biggest bane in the cable distribution industry, under-declaration,” said IDFC Securities.

According to a report by FICCI and KPMG, the number of TV households in India would reach about 156 million by 2015. The cable and satellite television market in India emerged in the 1990s and has since then seen strong growth, in terms of the growth of the number of subscribers from a mere 4 lakh in 1992 to around 9 crore today; a compounded annual growth rate (CAGR) of 35% over the last 18 years. With a share of roughly 40%, the television industry accounts for the largest share in the roughly Rs70,000 crore Indian entertainment and media industry, followed by print, film, radio and other media.

There are about 550 TV channels in the country, out of which about 400 are active. There are 106 channels, which still use the analogue system to broadcast signals to 90 million homes. In addition, there are 300 TV channels ready to start broadcasting as and when they receive the licence. Due to a dearth of digital infrastructure, broadcasters are compelled to continue to use the analogue system and pay more money as carriage fees.


Court to decide on framing of charges in 2G case on 22nd October

The court also made it clear it would resume hearing on the bail applications of various accused, including DMK MP Kanimozhi, from31st October

New Delhi: A Delhi court will pronounce on 22nd October its order on framing of charges in the second generation (2G) spectrum allocation case, involving former telecom minister A Raja, DMK MP Kanimozhi and 15 others, reports PTI.

“Put up for order on charge on 22nd October,” said special CBI judge OP Saini, reserving its order on the crucial stage of the framing of charges, after which a formal trial begins in a criminal case.

In the process of framing of charges, the court decides as to who among the accused has sufficient prima facie evidence against him to be put on trial.

The court also made it clear it would resume hearing on the bail applications of various accused, including DMK MP Kanimozhi, from 31st October, after it reopens after the Diwali break.

The court reserved its order after Special Public Prosecutor UU Lalit wrapped up his rebuttal arguments on framing of additional charges of criminal breach of trust under the Indian Penal Code against all the 17 accused.

The special court set up to try the 2G scam accused exclusively reserved its order on framing of charges a day after a Supreme Court bench monitoring the case asked CBI as to how long it was going to keep the accused in jail.

“The question is how many days they are going to be behind bars as the trial is yet to start. Will it be over in seven years,” the bench had asked.

The bench observed the 2G case accused have been behind bars for over seven months now, while the court was yet to decide on framing of charges in case.

Besides Mr Raja and Ms Kanimozhi, other accused in the case include the minister’s erstwhile private secretary RK Chandolia, former telecom secretary Siddhartha Behura, DMK-run Kalaignar TV’s MD Sharad Kumar, Bollywood filmmaker Karim Morani and Reliance Anil Dhirubhai Ambani Group’s executives Hari Nair, Gautam Doshi and Surrendra Pipara.

Besides telecom firms Reliance Telecom, Swan Telecom and Unitech (Tamil Nadu) Wireless, the other accused in the case include Swan Telecom promoter Shahid Usman Balwa, his cousin Asif Balwa, their colleague Rajeev Agarwal, Unitech’s MD Sanjay Chandra and DB Realty MD Vinod Goenka.

The CBI charge-sheet accuses Mr Raja and others of causing a whopping loss of Rs30,984 crore to the exchequer by allocating spectrum to ineligible operators as per a criminal conspiracy among themselves.

Their acts also involved commission of penal offences of forgery and cheating, besides the misuse of official position by public servants as per the provisions of the Anti Corruption Act.

Towards the fag end of conclusion of argument on framing of charges, the CBI had also sought slapping the charge of criminal breach of trust against the accused. The new charge entails a sentence of life term on conviction.

All the accused have vehemently opposed the allegations levelled against them by the CBI.


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