Market Report: Indian headache forces Vodafone to miss party

While most of its fellow blue-chip stocks were enjoying a pre-Christmas bounce on very light volumes, Vodafone was missing the party. A ticking off from the Indian government meant the telecoms giant was in a sulk yesterday, only managing to edge up 0.5p to 173.55p.

Considering it contains more than 800 million phone users, India has unsurprisingly been a major source of growth for Vodafone, yet there have been warnings from some in the City of the regulatory risks involved with working in the country.

The group is already involved in a tax dispute that could see it being forced to pay $2.6bn, and it now faces a new headache after the Indian telecoms department attacked operators – including Vodafone India – for sharing 3G airwaves.

An auction of the airwaves last year ended up with none of the carriers having a presence in all of India's regions, which a number of them have attempted to get around by signing roaming agreements with each other.

Yet the telecoms ministry has claimed that this is not allowed, although it did not say what punishment it would impose on the operators involved. Analysts from Espirito Santo warned that the dispute was "sure to end up in a legal battle", although Liberum Capital's Mark James tried to calm fears, saying it was only a "small negative".

Overall, the FTSE 100 managed to push up 67.23 points to 5,456.97, yet with it being the last full trading day before Christmas, the City wasn't exactly buzzing. For those who did make it in, our cousins across the Atlantic provided the main talking points thanks to a run of US economic data, with encouraging unemployment and confidence numbers tempered by GDP for the third quarter being revised down.

Meanwhile the UK's GDP growth for the same period being adjusted upwards was accompanied by increasing pessimism around next year, while rumours of a possible downgrade for France's credit rating once again did the rounds.

The banks were still enjoying the benefit of the European Central Bank's decision earlier in the week to offer three-year loans, even though some were questioning what the funds will be used for. Lloyds managed to keep its recent rally going by climbing 0.92p to 25.85p, while Royal Bank of Scotland and Barclays moved up 0.79p to 20.61p and 4.15p to 176.1p respectively.

It was a good day for many of the financial stocks in general, although not for Man Group. The world's largest listed hedge fund slipped back 0.5p to 125.4p – ending up as one of just eight top-tier stocks in the red by the bell – as Goldman Sachs' Chris Turner cut his 2012 forecasts, although the analyst still kept his "buy" recommendation.

Ocado and Carpetright are hardly two of the market's favourite companies, but they were racing up the FTSE 250 yesterday. The latter was driven up a huge 10.12 per cent to 508p as traders blamed a short squeeze, although others said it was still being helped by its chairman Lord Harris recently snapping up some more shares.

Ocado enjoyed an even stronger rise, jumping up 11.64 per cent to 59p to end a 12-day losing streak. Unfortunately for the online grocer, the move barely dented its recent losses, with its share price still a third lower than at the start of the month.

Elsewhere among the retailers, Espirito Santo was the latest to pick Home Retail out as the festive turkey, saying the Argos-owner would be the "hardest hit" on the high street. However, it was still lifted 3.6p to 83.53p, which some put down to revived bid chatter as market gossips refused to give up on recent vague rumours that the former M&S boss Sir Stuart Rose could be involved in a possible private equity approach.

Vague takeover speculation was also persisting around Afren (2.95p stronger at 85.95p). with Exxon once again being suggested as a potential predator for the oil company – not a fresh idea.

Stagecoach was left with the mid-tier index's wooden spoon, dipping 9.3p to 260.9p after JP Morgan Cazenove slammed on the brakes. The broker downgraded its advice by two notches to "underweight", saying there were "few short-term catalysts" ahead.

The seasonably named Angel Mining was flying up on AIM after the precious metals producer announced its second sizeable gold pour in less than a fortnight. The company – which operates in Greenland, the home of Father Christmas – bullishly claimed it was on course to meet its monthly production targets for the first time early next year, as it shot up 9.52 per cent to 1.72p.

There was rather less festive joy for Metrodome, the film distributor in which the Pizza Express entrepreneur Luke Johnson owns a stake, as it slumped 26.15 per cent to 1.2p following a profits warning.