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Indian Markets lose momentum
Thu, 19 Dec 11:30 am

After opening stable, the Indian Indices have fallen well above the dotted line in the morning session. The selling pressure is highest in Banking and Engineering stocks. The buying interest is the highest in Software and Pharma stocks.

The is trading down 180 points and the NSE-Nifty is trading down 57 points. The BSE Mid Cap index is trading down 0.2% and the BSE Small Cap index is trading down 0.3%. The Rupee is trading at 62.45 to the US Dollar.

Software stocks are trading higher today. Tech Mahindra and HCL Tech are among the stocks leading the gainers. According to a leading business daily, India's second largest Software firm Infosys, is trying to get back to an industry level growth rate. To achieve this, the company is actively pursuing software contracts of a larger size. To this end, Infosys has increased its hiring target for FY14. It plans to hire up to 16,000 graduates next year compared to the earlier plan of 10,000. Infosys founder Narayana Murthy said that if demand were to pick up, then the company would deploy additional staff on projects instead of keeping them on the bench. This would result in an improvement in the utillisation rate for employees in FY14 over FY13. Currently, the utillisation rate for Infosys stands at 77.8% (excluding trainees). Infosys is trading up 2.1% today.

Telecom stocks are trading lower today. Bharti Airtel and Reliance Communications are among the stocks leading the losses. The Indian telecom industry is poised for greater capex spending post the upcoming 2G auctions. A total of 403.2 MHz of spectrum will be auctioned in the 1,800 MHz (GSM) band on 23rd January 2014. The government has fixed the pan-India price at Rs 17.65 billion per MHz, as against Rs 14.96 bn suggested by TRAI. This price is around 26% lower than the reserve price in March 2013 auction price of Rs 23.78 bn but remains 18% higher than the price suggested by the TRAI in September 2013. The auction is expected to get a good response from telcos because the incumbent operators like Bharti Airtel, Vodafone, and Idea have licenses which will expire over next few years. They have to participate in the auction to acquire the spectrum. After acquiring the spectrum each operator would have to quickly ramp up their capex to roll out services. This could result in additional stress on their balance sheets if they were to resort to debt financing for the same.

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