TIGHT RANGE

Local stock indices continue to oscillate in a tight range, marginally below the neutral line in the early noon session, amid a slew of corporate earnings announcement raising volatility ahead of the F&O expiry. The indices are broadly showing a sideways kind of movement as investors seem unwilling to go for broad based kind of buying and are indulging only in stock specific activities. Supportive lead from the European counterparts which got off to a positive opening,  failed to enthuse the local sentiments while jump in international crude oil prices too does not seem to have gone down well with investors. Real Estate stocks have done the maximum damage so far as the BSE's Realty index has already shaved off over 2 percent, after majors like DLF and Unitech witnessed nasty cuts of 2.49% and 7.42% respectively. Index heavyweight RIL too slipped by around half a percent along with ADA group stocks, weighing down the frontline indices. However, the downside remained capped as bellwether ONGC surged by around a percent. Moreover, fertilizer stocks like RCF, Coromandel Intl, NFL, GSFC rallied after reports that cabinet has approved revision in nutrient based subsidy on fertilizers. Reports suggested that government is likely to spend Rs 33,500 crore for nutrient based subsidy and may revise FY12 subsidy for phosphatic and potassic fertilizers while buying was also witnessed in Consumer Durables and Auto majors like Titan, Videocon, Exide.

Meanwhile, the broader markets too are trading lacking any enthusiasm as the midcap index has eased 0.14% while the smallcap index traded flat. The market breadth on the BSE was in favour of declines in the ratio of 1135:1428 while 125 scrips remained unchanged.

The BSE Sensex fell by 48.68 points or 0.25% at 19,400.01. The index touched a high and a low of 19,542.05 and 19,360.61 respectively.

The BSE Mid-cap index fell by 0.14% and Small-cap index was unchanged.

On the BSE sectoral front, CD up 0.45%, Auto up 0.34%, Healthcare up 0.28%, PSU up 0.13% and FMCG up 0.06% were the major gainers.

On the other hand, Realty down 2.37%, Metal down 0.40%, IT down 0.31%, Power down 0.30% and Teck down 0.26% were the major laggards in the space.

The top gainers on the Sensex were Bajaj Auto up 1.31%, ONGC up 1.16%, Sterlite up 0.44%, NTPC up 0.38% and ITC up 0.36%.

On the flip side R Com down 3.09%, BHEL down 1.63%, DLF down 1.62%, Jindal Steel down 1.62% and R Infra down 1.44% were the major losers on the index.

Meanwhile, a Committee of Secretaries (CoS) set up by the government of India which is looking into the issue of how to price natural resources including spectrum, has said in a draft report that telecom spectrum was a scarce natural resource and it must be auctioned in order to discover its true market price.

The mandate of the committee was to develop a framework for transparent and just pricing of natural resources. It has already prepared a draft report and a final report is likely to be submitted to the Cabinet soon. The committee was set up following the controversy of government allocating the 2G spectrum in 2008 at throwaway prices. It will however look at broader contour of all the natural resources including oil and gas and other minerals.

In its recommendations regarding the telecom spectrum, the committee has also agreed with the view of ministry of communications regarding delinking spectrum from license. The committee feels that while the license was a contract allowing a particular entity to conduct a particular business, spectrum was a natural resource and must be provided separately against a market based price. By providing spectrum with license, the government might be under-pricing the spectrum.

Finally, the committee is also in favour of allowing spectrum trading by telecom operators as has been argued by the telecom regulatory authority of India (TRAI). The department of telecommunications (DoT) is in the process of finalizing regulations for spectrum trading. The committee feels that by allowing trading, most efficient use of the resources can be achieved while at the same time ensuring that government gets a reasonable price in auction of spectrum.

The 2G license controversy has forced the government to bring a streamline policy for allocating natural resources. In fact many political analysts feel that not just telecom spectrum but allocation of all other natural resources has been rather opaque in India for long and it was time for some rule based play to be implemented. This is the reason that the CoS has been given a wider mandate to recommend efficient and transparent ways for allocating all natural resources and not just the spectrum.

The S&P CNX Nifty eased 15.15 points or 0.26% at 5,818.75. The index touched a high and low of 5,856.40 and 5,805.85, respectively.

The top gainers on the Nifty were Ambuja Cement up 1.89%, Sun Pharma up 1.34%, Bajaj Auto up 1.29%, ONGC up 1.24% and HCL Tech up 0.72%.

On the other hand, R Com down 2.90%, SAIL down 2.78%, Jindal Steel down 1.99%, Ranbaxy down 1.74% and DLF down 1.68% were the major losers on the index.

On the Asian front, Shanghai Composite was down 0.86%, Jakarta Composite was down 0.28% and Taiwan Weighted was down 0.09%. On other hand, Hang Seng was up 0.17%, KLSE Composite was up 0.19%, Nikkei 225 was up 1.63%, Strait Times was up 0.16% and Seoul Composite was up 0.07%.

The European markets have opened on a positive note as the France's CAC 40 added 0.73%, Germany's DAX gained 0.59% and Britain's FTSE 100 was up by 0.21%