After opening on a weak note, the Indian indices are trading well below the dotted line in the morning session. All sectoral indices are trading in the red. The selling pressure is the highest in auto and banking stocks.
The BSE-Sensex is trading down 320 points and the NSE-Nifty is trading down 96 points. The BSE Mid Cap index is trading down 1.7% and the BSE Small Cap index is trading down 1.6%. The rupee is trading at 62.67 to the US dollar.
Most software stocks are trading lower today. Infosys and Tech Mahindra are among the stocks leading the losses. As per a leading business daily, India's leading IT firm Infosys may be in for an unexpected positive surprise. Bank of America (BoA), the second largest bank in the US has announced a large downsizing of its technology staff. It is believed that a significant amount of IT work that was being done in-house at the bank may now be outsourced. BoA is one of the largest clients of Infosys accounting for over US$ 300 m of annual business but it's not clear if Infosys had any prior information about this development. Also, if the bank were to decide to outsource a large amount of in-house work, it need not benefit only Infosys. The contract could be awarded as a global tender, in which other Indian IT firms like TCS could also participate. Infosys has declined to comment on this issue.
Most telecom stocks are trading lower today. Reliance Communications and Tata Communications are among the stocks leading the losses. As per a leading business daily, the Empowered Group of Ministers (EGoM) is to meet today to decide on key issues plaguing the telecom sector. A decision on the spectrum usage charge (SUC) as well as the long pending mergers and acquisitions (M&A) norms are likely to be taken. The M&A norms have been ready for a while but have not been released due to a pending legal opinion. The telecom commission had recommended three options for levying the annual spectrum usage charge. The SUC is currently between 3-8% depending on the amount of spectrum held by the operators. All the three options would be decided at the meeting. In light of this meeting, the department of telecom (DoT) has extended the last date to withdraw applications for the upcoming spectrum auction to January 28 from January 27 earlier.