After barely managing to stay in the positive for most of the session today, the Indian indices slipped below the dotted line in the final hours of trade. Infact the Indian markets were amongst the few losers in Asia. Profit booking in key index heavyweights from commodity, realty, telecom and banking sectors led the decline in the Indian markets. While the BSE Sensex closed lower by around 167 points (down 1%), the NSE Nifty lost around 47 points (down 1%). Midcap and small cap stocks fared marginally better with losses of 0.6% each.
As regards global markets, most other Asian markets closed in the positive today with Australia and Indonesia leading the pack of gainers. European markets have, however, opened lower. The rupee was trading at Rs 47.14 to the dollar at the time of writing.
The government of India is trying to milk more revenue from the 2G spectrum space in telecom after having pocketed a bounty during 3G auctions. It had earlier provided for revenues of Rs 360 bn from the auction of 3G spectrum as well as from broadband wireless access (BWA) licences. The regulator TRAI had suggested that operators with 2G spectrum of more than 6.2 MHz should pay a one-time fee based on the price of 3G spectrum as per the recent auction. However, it later decided to go in for further consultations on the 2G pricing recommendation after facing a barrage of criticism from telecom companies that would have to pay more for their frequencies. Nevertheless, the regulator seems keen to tap more funds through this route so as to plug India's fiscal deficit problem. India's fiscal deficit is expected to fall below 5% of gross domestic product (GDP) in FY11 from the projected figure of 5.5%. This is largely due to the income from 3G auctions and lesser oil subsidies.
It has been nearly a year since India reported its first swine flu death in August 2009. Four Indian drugmakers are set to compete for an estimated Rs 30 bn indigenous H1N1 vaccine market in the country. This includes Cadila Healthcare and one of India's largest vaccines maker Panacea Biotec. The estimated market size for H1N1 vaccine over next 12 months is expected to be about 4 to 5 m doses. While the opportunity is huge given that the vaccine is set to be affordable at Rs 300 per dose, the margins may not be lucrative. While Cadila plans to take the retail distribution route for its VaxiFlu-S, Panacea is looking to sell the vaccine to the government.
Power utility major Tata Power is looking for a strategic stake purchase in coal mines of Indonesia or South Africa. This is primarily to fuel its upcoming 1600 MW super-critical thermal power project in coastal Maharashtra. The project needs 6 to 8 m tonnes of coal to fuel the power plant. While Tata Power does not plan to buy an entire coal mine, based on the size of the mine, it will acquire a stake that will assure 8-9 m tonnes of coal supply. The company already has a 30% stake in KPC mine in Indonesia that supplies 12-14 m tonnes of coal to its 4000-MW Mundra Ultra Mega Power Project (UMPP). The Indonesian mine produces 55-60 m tonnes of coal annually. We believe that this is a step in the right direction as it will assure consistent supply of inputs to grow the business.