Largecaps in favour at the moment

Mon, 21 Jun 01:30 pm

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   09:30 am   

   11:30 am   

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The Indian markets continued to trade well above the dotted line during the previous two hours of trade. Buying activity is being witnessed in stocks across sectors led by those from the metal, realty and banking spaces. Stocks from the IT and oil & gas spaces are amongst the lowest gainers at the moment. The overall advance to decline ratio is poised at 2 to 1 on the BSE.

The BSE-Sensex is trading higher by around 305 points (up 1.7%), while the NSE-Nifty is up by about 90 points (up 1.8%). The BSE-Midcap and BSE-Smallcap indices are trading higher by 1.2% and 1.3% respectively. The rupee is trading at 45.66 to the US dollar.

Telecom stocks are currently trading firm led by Reliance Communications, Idea Cellular and Bharti Airtel. A leading business daily has reported that telecom major Bharti Airtel has written another letter to the Telecom Regulatory Authority of India (TRAI) stating that mobile operators holding excess spectrum should not be charged the one-time fee. The company argued that allocation beyond 6.2 Mhz was as per the government’s policy at various times. It is reported that the Department of Telecommunications (DoT) has always been stating that all existing spectrum allocations have been granted strictly under the applicable laws, license conditions, guidelines or orders.

The TRAI had last month asked operators holding spectrum in excess of 6.2 Mhz (the contractual limit) to shell out a one-time charge. However, price for this spectrum would be on linked to the recently concluded 3G auctions. With telecom operators going all out with the bookings (with some of them admitting to auction pricing being astronomical), the amount they would have had to shell out for the excess 2G spectrum that they hold would be very high as well. In addition, with licenses of select telecom operators expiring in a couple of years, they would need to spend a lot on 2G spectrum licenses. However, it may be noted that the issue of 6.2 Mhz is pending before telecom tribunal TDSAT. It would be interesting to see the outcome of the same.

Auto stocks are trading higher lead by M&M and Maruti Suzuki. As per a leading financial daily, Maruti Suzuki is facing export problems. This is due to the Euro zone financial crisis, a weaker Euro and withdrawal of scraping incentives. In fact due to this the company has lowered its export target by 5% for FY11. However, these targets are the same level as that of FY10. The company believes that it can cover up for the short fall from Euro zone by selling cars in other geographies like South Africa and Algeria. It may be noted that Maruti enjoys better margins domestically. This year as the domestic market is expected to grow by 14 – 15%, the company would see higher margins. The company CFO also started that market share is very important for the company and it and is confident of holding 50% market share this year and it will be able to produce 1.2 m units. In new development the company is planning to launch CNG variants across its portfolio. However, no timeline for the same has been indicated.