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Benchmarks continue lackluster trade slightly in red
Nov-21-2019

Indian equity benchmarks continued their lackluster trade slightly in red in afternoon session tracking weakness in Asian peers. Investors’ sentiments remain dented with Commerce and Industry Minister Piyush Goyal’s statement that the government did not join the mega free trade agreement RCEP as the grouping did not address the outstanding issues and concerns of India. Some concern also came with a private report stating that India’s economic growth probably hit a new low last quarter, with early forecasts showing expansion below 5%. Meanwhile, Commerce and Industry Minister Piyush Goyal said that the government is considering a proposal to provide foreign exchange loan at cheaper interest rate to exporters. On the sectoral front, select Telecom stocks were trading in green with Cellular Operators Association of India (COAI) Director General Rajan Mathews stating that the combination of three things -- two-year moratorium for telecom companies to pay their spectrum dues, proposed tariff hikes in mobile phone call and data charges and modifying adjusted gross revenue will provide a relief to debt-laden telecom sector.

On the global front, Asian markets were trading lower, as a fresh row between Washington and Beijing over U.S. bills on Hong Kong could complicate their trade negotiation and delay a 'phase one' deal that investors had initially hoped to be inked by now. Back home, the BSE Sensex is currently trading at 40648.47, down by 3.17 points or 0.01% after trading in a range of 40558.54 and 40744.85. There were 12 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.04%, while Small cap index was down by 0.03%.

The top gaining sectoral indices on the BSE were Capital Goods up by 0.77%, Industrials up by 0.58%, Auto up by 0.34%, IT up by 0.28% and Bankex was up by 0.23%, while Telecom down by 2.34%, Metal down by 1.02%, Energy down by 0.69%, PSU down by 0.59% and Oil & Gas was down by 0.55% were the top losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 1.59%, Larsen & Toubro up by 1.46%, Bajaj Auto up by 1.20%, HDFC Bank up by 0.72% and Hero MotoCorp was up by 0.70%. On the flip side, Bharti Airtel down by 2.39%, ONGC down by 1.57%, Yes Bank down by 1.52%, NTPC down by 1.37% and Indusind Bank was down by 1.37% were the top losers.

Meanwhile, Cellular Operators Association of India (COAI) Director General Rajan Mathews has said that the combination of three things -- two-year moratorium for telecom companies to pay their spectrum dues, proposed tariff hikes in mobile phone call and data charges and modifying adjusted gross revenue will provide a relief to debt-laden telecom sector. However, he said the deferred payment will be adjusted in balance annual instalments to be paid by the service providers for spectrum they purchased through auctions.

Mathews has said that as per legal opinion given by legal stalwarts that DoT is well within its right to modify definition of AGR prospectively. He also said the AGR judgement of the Supreme Court has added debt burden on another Rs 2 lakh crore on the telecom sector. He said “If the government removes AGR prospectively, as we pay for entire spectrum in auction, or modifies it as per TDSAT judgement, it will resolve telecom sector issues.” He noted the telcos pay up to 30 percent of their revenues to the government, by way of various levies and taxes, which is an enormous burden on the industry. He stated that “we have been requesting the government that these levies and Taxes be rationalised and the same is also one of the important goals of NDCP. However, these aspects of the NDCP are yet to be operationalised and we are engaging with the government on the same.”

Director General further said that the 2-year moratorium will not reduce debt on the telecom sector as government will charge interest on the deferred payments. He said it will help industry if government aligns interest with prime lending rate or floating method instead of fixed rate of 9.5 percent. He noted that the interest rates have been coming down. Adding further, he said the debt on telecom service providers at present is close to Rs 6 lakh crore and telecom operators will need to increase their average revenue per user by at least 20 percent for partial relief.

The CNX Nifty is currently trading at 11993.10, down by 6.00 points or 0.05% after trading in a range of 11965.05 and 12028.20. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 8.96%, Adani Ports &SEZ up by 1.98%, Eicher Motors up by 1.59%, ICICI Bank up by 1.47% and Larsen & Toubro was up by 1.44%. On the flip side, Bharti Airtel down by 2.47%, Bharti Infratel down by 2.03%, Coal India down by 1.80%, GAIL India down by 1.61% and ONGC was down by 1.57% were the top losers.

All Asian markets were trading lower; Hang Seng decreased 428.90 points or 1.6% to 26,460.71, Taiwan Weighted dropped 72.93 points or 0.63% to 11,558.27, Shanghai Composite declined 14.61 points or 0.5% to 2,896.44, Jakarta Composite lost 51.17 points or 0.83% to 6,103.94, KOSPI fell 28.72 points or 1.35% to 2,096.60, Straits Times trembled 25.32 points or 0.78% to 3,204.46 and Nikkei 225 slipped 109.99 points or 0.48% to 23,038.58.
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