NEGATIVE BIAS

The benchmark indices continue to trade choppy with negative bias in late afternoon session as traders rolled over positions in the futures & options (F&O) segment ahead of the expiry of the near-month April 2011 contracts. Meanwhile, the other Asian markets settled in mixed note, while US index futures and European markets were also trading in green. Back home, Realty, Metal, IT down, FMCG down and TECk counters were witnessing selling pressure while, Auto, Consumer Durables (CD) and Healthcare stocks showing some buying action. The market breadth on the BSE was negative; the losers thrashed the gainers in a ratio 1665:1109 and 114 shares were unchanged. The broader markets were also trading slightly in negative range; the BSE Mid cap index and Small cap index lost 0.44% and 0.18% respectively. 

The BSE Sensex shed 95.63 points or 0.49% at 19,353.06. The index has touched a high of 19,542.05 and a low of 19,298.07 respectively.

The BSE Mid cap index and Small cap index lost 0.44% and 0.18% respectively. 

On the BSE sectoral front, Auto up 0.35%, CD up 0.12% and Healthcare (HC) up 0.11% were the only gainers.

On the other hand, Realty down 2.38%, Metal down 0.77%, IT down 0.74%, FMCG down 0.72% and TECk down 0.66% were the major losers in the BSE sectoral space.

The top gainers on the Sensex were ONGC up 1.65%, ICICI Bank up 0.78%, Bajaj Auto up 0.77%, Bharti Airtel up 0.31% and Maruti Suzuki  up 0.27%.

On the flip side, RCom down 4.13%, DLF down 2.11%, Cipla down 1.65%, HDFC down 1.39% and BHEL down 1.38% were the major losers on the index.

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 declined 30.10 points or 0.52% at 5803.80. The index has touched a high and a low of 5856.40 and 5786.30, respectively.

The top gainers of the Nifty were ONGC up 1.77%, Sun Pharma up 1.37%, ICICI Bank up 0.98%, Bajaj Auto up 0.84% and Ambuja Cements up 0.79%.

On the flip side, RCom down 4.47%, SAIL down 3.11%, DLF down 2.32%, Kotak Bank down 2.18% and Cipla down 2.08% were the major losers on the index.

The other Asian markets settled in mixed note. Jakarta Composite gained 0.11%, KLSE Composite rose 0.35%, Nikkei 225 surged 1.63% and Seoul Composite rose 0.07%; while Shanghai Composite dropped 1.29%, Taiwan Weighted shed 0.09%, Hang Seng declined 0.37%, Straits Times soared 0.06%.

The European markets were on a positive note .CAC 40 added 0.71%, DAX gained 0.49% and FTSE 100 was up by 0.06%.