Key benchmark indices hovered within a narrow range in negative terrain in mid-morning trade. At 11:25 IST, the barometer index, the S&P BSE Sensex was down 94.83 points or 0.35% at 27,106.66. The Nifty 50 index was currently down 27.50 points or 0.33% at 8,310.40. The Sensex and the Nifty, both, had hit their lowest level in more than a week in morning trade. Weakness in Asian stocks weighed on sentiment.
In overseas stock markets, Asian stocks edged lower as investors awaited US jobs data to get a clearer picture of the health of the world's biggest economy. US stocks closed mostly lower yesterday, 7 July 2016, tracking sinking oil prices, but the market pared losses late in the session as investors sought bargains ahead of the closely watched jobs report. Private-sector employment picked up a bit in June, suggesting the weak May nonfarm-payroll report may be an anomaly, Automatic Data Processing Inc. reported yesterday, 7 July 2016 and initial jobless claims fell last week to a nearly three-month low, showing no evidence of rising layoffs. The US government will announce nonfarm payroll report for June 2016 today, 8 July 2016
Closer home, the market breadth indicating the overall health of the market was negative. On BSE, 1,350 shares fell and 906 shares rose. A total of 114 shares were unchanged. The BSE Mid-Cap index was currently down 0.04%. The BSE Small-Cap index was currently down 0.29%. The decline in both these indices was lower than the Sensex's fall in percentage terms.
Cement stocks were mixed. ACC (up 0.18%), Ambuja Cements (up 1.3%), and UltraTech Cement (up 0.58 %) gained. Shree Cement declined 0.23%.
Grasim Industries fell 0.01%. Grasim has exposure to the cement sector through its holding in UltraTech Cement.
Telecom stocks declined after reports suggested that that the telecom department is likely to soon send out demand notices to some carriers for under reporting of revenues. Reliance Communications (down 2.19%), Bharti Airtel (down 2.48%), Tata Teleservices (Maharashtra) (down 2.08%) and Idea Cellular (down 3.24%) declined.
As per reports, the telecom department (DoT) is likely to soon send out demand notices to six carriers for a cumulative Rs 12488 crore for under reporting of revenues to the tune of Rs 46000 crore after the matter was highlighted by the Comptroller & Auditor General (CAG) in its report in February this year. The figure includes the underpayment of licence fee and spectrum usage charge (SUC) of Rs 5000 crore plus penalty and interest of around Rs 7500 crore, as per reports.
According to the CAG report, stock exchange listed companies Bharti Airtel, Idea Cellular and Reliance Communications and unlisted companies Vodafone India, Aircel and Tata Teleservices had collectively understated gross revenue amounting to Rs 46045.75 crore between 2006-07 and 2009-10, causing a loss of Rs 12488.93 crore to the national exchequer, reports suggested. This has prompted the government to initiate a special audit for three years to year ended 31 March 2011 (FY 2011). However, these companies had reportedly rejected the accusation. According to the CAG's calculations, telecom companies under-reported their revenues by Rs 45000 crore what they pay as licence fee and a spectrum usage charge to the government on their revenue earned.
Shares of Bharti Infratel fell 2.51%. Bharti Infratel is a provider of tower and related infrastructure and is a unit of Bharti Airtel.
The BSE Telecom index had outperformed the market over the past one month till 7 July 2016, rising 1.94% compared with 0.71% rise in the Sensex. The index had, however, underperformed the market in past one quarter, gaining 4.46% as against Sensex's 10.19% rise.
Lupin gained 0.86% to Rs 1,671.50, after the company's announcement that the inspection carried out by the United States Food & Drug Administration (USFDA) in July 2015 at its Goa facility has been completed. Shares of Lupin had surged 6.25% to settle at Rs 1,657.30 yesterday, 7 July 2016, after the company's announcement that it had received notification that the inspection carried out by the United States Food & Drug Administration (USFDA) in July 2015 at its Goa facility has been completed and that the agency has issued Establishment Inspection Reports (EIR). The announcement was made during trading hours. Lupin, however, cautioned that the responses from the March 2016 USFDA inspection and updates thereafter are still under review by the USFDA.
Zee Learn jumped 11.91% after net profit surged 102.78% to Rs 8.01 crore on 17.52% increase in total income from operations to Rs 42.06 crore in Q1 June 2016 over Q1 June 2015. The result was announced after market hours yesterday, 7 July 2016. The company's operating earnings before interest, taxes, depreciation and amortization (EBITDA) rose 58.05% to Rs 12.96 crore in Q1 June 2016 over Q1 June 2015. Operating EBITDA margin increased to 30.8% in Q1 June 2016 compared with 22.9% in Q1 June 2015.
The company said it delivered sterling first quarter performance giving better than expected profits, strongly improving operating margins and has steadily progressed against fiscal 2017 planned initiatives.
Meanwhile, India Meteorological Department said in its latest update yesterday, 7 July 2016 that in the week from 30 June to 6 July 2016, rainfall was above long period average (LPA) by 35% over the country as a whole. For the country as a whole, cumulative rainfall during this year's monsoon has so far upto 6 July been 1% above LPA, thus making a further recovery of 13% from the last week ending on 29 June, it added. IMD had predicted above normal rains this monsoon season. The monsoon rains is important for the farm sector, as around 70% of the country's farmlands are rain-fed. The rains have an impact on the whole economy, as rural spending on consumer goods depends on the rainfall.
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