Status quo...

Markets continue to trade lower amidst weak sentiment and caution prevailing. Index heavyweights are leading the fall, with only 4 of the Sensex components trading in the black. Banking, commodity, energy and software stocks are all witnessing selling pressure. Select buying is being witnessed in auto stocks.

The BSE Sensex is trading at 6,405 (down 74 points) and the Nifty is trading at 2,008 (down 23 points). The rupee is trading at Rs 43.73 per US Dollar.

Telecom stocks are trading weak all round, in line with the overall sentiment. The Rs 550 bn-plus Tata Group has stated its intent to capture 'leadership position' in all spheres of telecom services by next fiscal. To this end, the group is planning an additional Rs 100 bn investment in the telecom business in the next 12 to 16 months, with a central role for Group Chairman Ratan Tata. Mr. Tata would be directly involved in planning and coordinating the various strategies of the group's telecom companies, which have been showing rapid growth. VSNL and Tata Teleservices (Maharashtra) are the main telecom companies of the Tata Group. However, it needs to be understood that the Indian telecom sector is one of the most competitive in the world and this has resulted in a tariff free-fall over the past few years. Going forward, gaining market share will prove to be a difficult task for the group, particularly in the mobile telephony segment, where Bharti, Reliance (RELI.BO, news) and BSNL call the shots due to the size advantage that they enjoy. It remains to be seen as to how the group will go about attempting to become a more sizeable player in the sector. Currently, Tata Teleservices (1%) is trading lower, while VSNL is trading flat. Other majors Bharti (2%) and MTNL (1%) are also showing weakness on selling pressure.

Oriental Bank (ORBC.BO, news) of Commerce will tap the market for its second public issue on April 25 in order to raise around Rs 17 bn. The bank will offer 58 m shares to the public and the offer will open on April 25 and close on April 29. Going by the current trend, the bank is likely to announce the offer at a discount to the prevailing market price. The issue is expected to raise the bank's capital adequacy ratio (CAR), which had reduced significantly after it acquired the ailing Global Trust Bank (GTB), with bad assets of Rs 14 bn. After the acquisition, the net non-performing assets (NPAs) of the bank rose from zero to 1.7% due to the bad assets of GTB. In a meeting with analysts, the bank had said that it was making consistent efforts towards recoveries and in due course of time, it will be back to being a zero-NPA bank. The stock is currently trading flat, with a negative bias. Other major banks are on similar footing, with Allahabad Bank (2%), Bank of Baroda (1%), Canara Bank (2%), SBI (1%), Union Bank (2%) and ICICI Bank (ICBK.BO, news) (2%) all trading lower. HDFC Bank (HDBK.BO, news) (1%) and PNB (2%) have, however, managed to buck the trend and are trading strong.

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