Markets trading flat; Telecom shares down

ith negative bias on prMarkets turned negative amid profit taking in telecom shares after downgrade by a foreign brokerage

Markets pared their early gains and were trading flat with negative bias on profit takin in telecom shares after brokerage downgrades.

At 10:30AM, the 30-share Sensex was down 32 points at 21,257 and the 50-share Nifty was down 4 points at 6,316.

Asian shares were mixed after a firm opening on the back of robust U.S. data and upbeat earnings from Bank of America helped squash concerns of a slowdown in the world's largest economy following disappointing jobs growth in December.

Japan's benchmark Nikkei was down 0.2% while Hang Seng gained 0.2%. However, China's Shanghai Composite recovered and was up 0.04% while Straits Times was trading flat with negative bias.

FMCG, Auto, Oil and Gas indices were the top losers among the sectoral indices on the BSE while Metal and Capital Goods indices were among the top gainers.

Telecom scrips are under pressure after Credit Suisse downgraded Bharti Airtel to neutral and Idea Cellular to underperform.  The foreign brokerage said that Reliance-Jio joining spectrum auctions is a “negative surprise,” against market expectation. Bharti Airtel was down over 4% while Idea Cellular dropped 6%.
 
HCL Tech was up nearly 2% at Rs 1,358 after it posted a Q2 consolidated net profit of Rs 1,496 crore, up 5.7% q-o-q and 58.4% y-o-y. Consolidated revenue came it at Rs 8,184 crore, up 2.8% q-o-q and 30.4% y-o-y. EBIT was Rs 1,941 crore, up 2.4% q-o-q and 58.7% y-o-y.. The IT major reported consolidated dollar revenue of $1,321 million, up 4% q-o-q.

TCS trimmed some of its early gains ahead of its third quarter earnings scheduled to be announced later today. The company is likely to deliver another industry-leading performance, a seasonally weak quarter notwithstanding. According to consensus Bloomberg estimates, TCS is likely to post revenue of Rs 21,407 crore, up 2.1 per cent sequentially. Net profit is pegged at Rs 5,124 crore, a sequential rise of 10.6 per cent; earnings before interest, tax, depreciation and amortisation margin is seen flat, at 31.4 per cent.

Coal India was up nearly 1% after the board announced a special interim dividend of Rs 29 per share.

Index heavyweight Reliance Industries trimmed some of its early gains and was marginally up on recent reports that the company plans to acquire stake in Venezuela crude oil block.

Axis Bank is up 1.3% ahead of its third quarter earnings later today.  Other Sensex gainers include, HDFC, L&T, Tata Steel and Infosys.

Among other shares, DCB Bank has rallied 6% to Rs 59.80 on the BSE after reporting a strong 33% year-on-year (yoy) jump in net profit at Rs 36 crore for the third quarter ended December 2013 (Q3) on back of higher interest income and improvement in net interest margin. The private sector lender had registered a profit of Rs 27 crore in the year ago quarter.

In the broader market, the BSE Mid-cap and Small-cap indice were marginally down.

Market breadth turned negative with 957 losers and 881 gainers on the BSE.