Indian Markets Under Pressure

Fri, 13 Nov 11:30 am

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After opening the day deep in the red, the Indian indices have continued to trade negatively. Sectoral indices are trading on a discouraging note with stocks from the IT, auto and capital goods sectors bearing the maximum brunt.

The BSE-Sensex is trading down 270 points (down 1.1%) and the NSE-Nifty is trading down 77 points (down 1%). The BSE Mid Cap index is trading down by 1.4% and the BSE Small Cap index is trading down by 0.8%. The rupee is trading at 66.13 to the US$.

Automobile stocks are trading in the red with Maruti Suzuki and Eicher Motors leading the losses. As per a leading financial daily, domestic car sales rose at the fastest pace in four-and-half years during the month of October. This has been seen as a clear signal of activity returning to the sector that has been witnessing slowdown for few years .

As the data stated, manufacturers dispatched 1,94,158 cars to showrooms during the month. This was recorded up by 21.8% on a YoY basis. Total sales, however, were tepid compared with the record of 2,33,151 units achieved in March 2012. Overall passenger vehicle sales, including those of utility vehicles and vans, rose 21.5% YoY in October, the quickest since October 2013, to 2,68,629 units.

The strong performance wasn't limited to the passenger vehicle segment. In the light commercial vehicle segment, which had reported growth only once in the past 29 months, sales grew by 6.8% during October. Scooter sales at 5,25,138 units in October were the highest ever, up by 37% YoY.

If you want to compare the performance of individual automobile industries, we have tracked their YoY performance for the March 2015 quarter. The same can be accessed here.

Stocks in the telecom space are also trading negatively with AGC Networks and Tata Communications witnessing maximum selling pressure. As per an article in Economic Times, the Telecom Regulatory Authority of India (TRAI) is likely to float a consultation paper by the end of November. The same is aimed at establishing the reserve price of airwaves across different bands that the government plans to auction next year.

The consultation paper will launch the countdown to a spectrum auction in which the government is expected to sell frequencies in the 2G, 3G and 4G bands, apart from the bandwidth left unsold from the previous sale. The Department of Telecommunications (DoT) will also auction bandwidth in circles where the telecom permits of some operators expire in 2017.

The March sale had fetched the government Rs 11 billion. As reported, the winning price for airwaves in the 900 MHz band at Rs 730 billion was 93% higher than the reserve price in March 2015. For airwaves in the 800 MHz band, the winning auction price was 77% higher at Rs 172 billion, while for the 1800 MHz band, it was 16% up at Rs 96 billion. Under the new liberalized spectrum rules, all these bands can be used to offer any telecom services using any technology.