Healthcare, auto stock drive the gains

Mon, 27 Dec 09:30 am

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Asian markets have opened the day on a mixed note. Stocks in China (up 0.7%), Singapore (up 0.7%) and Japan (up 0.6%) are trading in the green. On the other hand, Hong Kong (down 0.3%) and Korea (down 0.1%) are witnessing selling pressure. Indian markets have started the week on a positive note. Healthcare and auto stocks are leading the pack of gainers.

The BSE-Sensex is trading higher by around 80 points (0.4%), while the NSE-Nifty is up by about 20 points (0.3%). Mid and small cap stocks are trading in the positive as well, with the BSE-Midcap and BSE-Smallcap indices up by 0.5% each. The rupee is trading at 45.09 to the US dollar.

IT stocks have opened the day on a mixed note. Wipro and Infosys are witnessing some selling pressure. TCS on the other hand has opened with gains. As per a leading business daily, these IT companies are all set to dole out larger paychecks to retain talent. IT majors TCS, Infosys and Wipro have announced that they plan many more promotions and bigger salary hikes next year in order to retain the talent pool. While the companies did give out higher pays and bonuses in FY10, they've indicated that it did not bring down the attrition rates. Higher attrition rates have been a major problem for the IT industry. The industry has seen a reversal in fortunes with demand picking up after it was negatively impacted by the global crisis. However, hiring and retaining engineering and management staff to meet this demand is soon becoming an issue. Both Infosys and Wipro are ready to give almost 100% hikes in variable pays and give out double digit wage hikes. TCS plans to double the number of promotions. While this will definitely help in meeting the growing demand, we see a pressure on the margin front for going forward.

The woes for the new telecom operators continue to mount. Earlier during the year, their rollout plans were impacted by the issues surrounding ban on import of equipment from Chinese manufacturers. The dust on this had started to settle when they were again undone by the entire telecom scam that called to question most of their licenses. Things have taken another bad turn as the department of telecom (DOT) has slapped huge penalties on most of them for failing to meet their rollout obligations. A pre-condition for the grant of the spectrum license was a minimum rollout obligation for the firm. However, most of the firms have not met these obligations. The DOT has given a 15 days' notice period to the firms who have not complied with the rollout terms. It has also threatened to cancel the licenses if the firms do not roll out their services within the next 52 weeks. While a lot of noise has been created on the issue of new licenses, nothing much has been done about it till now. But if these fines and penalties do become a reality, the new operators may start rethinking their India plans. This would definitely serve as a breather for the sector that has been gripped with fierce competition due to a high number of operators in the space. Meanwhile, telecom stocks have opened today on a strong note. Reliance Comm. and Idea Cellular are trading in the green. However, Bharti Airtel has opened the day in the red.