Broad based selling drags indices

Thu, 1 Jul 11:30 am

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After starting today's session on a negative note, the Indian indices continue to linger in the red. Profit booking in heavyweights from energy, banking and commodity sectors have weighed heavy on the indices. Stocks from the telecom, FMCG and pharma space have evinced selective buying interest. Other key Asian markets are also in the negative territory.

The BSE-Sensex is trading down by around 152 points, while the NSE-Nifty is down by about 66 points. The BSE-Midcap index is in the negative territory trading lower by 0.16%. However, small stocks are trading flat with BSE-Smallcap index trading higher by 0.36%.

Tech stocks across the board are trading weak. Tech Mahindra, and Mphasis are witnessing some gains. While, TCS, and Wipro are trading in negative territory. Infosys Technologies has decided to offer its employees a minimum of five equity shares. These will be distributed on occasion of the company's 30th anniversary. Employees on payroll as of March 2010, and who are in service in August when the shares get distributed, will receive five equity shares of Infosys. Plus an additional share for each completed year of service at Infosys.  This share allocation is purely a goodwill gesture from the firm, and will not have any lock in period for holding the shares. Thus it is different from stock-option offerings, which have a minimum locking in or vesting period. Infosys had 113,796 employees on its payroll at the end of FY10. The company will start the distribution of over 565,000 shares, valued at Rs 1.6 bn from August 2010.

Most IT companies are facing attrition trouble due to the higher salaries offered by global majors like Cognizant and Accenture. Offering such an incentive is expected to help retain employees as well as increase productivity of the staff.

Media stocks are trading mixed with HT Media and Jagran Prakashan leading the gains. Reliance Media and Dish TV were among the major losers. As per a leading news daily, TRAI has hiked foreign investment in broadcast carriage services such as DTH, IPTV, High end in the sky (HITS) and multi-service operators (MSOs) from 49% to 74%. Key beneficiary of this move would be DTH players like Dish TV. TRAI has also made specific recommendations for local cable operators proposing that the FDI cap be reduced from 49% to 26%. This would encourage consolidation of smaller operators with bigger ones. Apart from this TRAI has also proposed increasing FDI cap in the radio segment to 26%, up from current 20%. This should benefit companies such as ENIL Ltd and Reliance Media World.