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Sensex Nifty fall 1%, Midcap outperforms; BHEL rises 2%


The News International Team

01:25pm Telcos in focus: Payment for spectrum won by companies in the auction concluded on Wednesday is expected to push up the debt on telecom operators to about Rs 3.5 lakh crore, leading to a significant rise in tariffs, says industry body Assocham.

“Telecom industry which was already saddled with nearly Rs 2.5 lakh crore is now going to helplessly see it mount to nearly Rs 3.5 lakh crore,” Assocham Telecom Council Chairman T V Ramachandran said in a statement.

The spectrum was sold at about 68 per cent premium, at Rs 1,09,874.91 crore.

At the base price fixed by the government, its value was Rs 65,463.40 crore. About 11 percent remained unsold which also included 800 Mhz, 1800 Mhz and 2100 Mhz (3G) band.

Idea Cellular, Airtel, Vodafone and Reliance Communications participated in the auction mainly to defend their existing spectrum holding as their licences are set to expire. Reliance Jio, Tata Teleservices, Telewings (Uninor) and Aircel participated to buy additional spectrum.

Ramachandran said that “consumer tariffs are bound to rise significantly but, due to the level of hyper-competition present here, the increase would not be anywhere near adequate to cover the higher cost”. He said that the cash outgo may restrict roll out of networks and affect the basic objectivity of sector to provide telecom connectivity to people.

01:00pm Market Check

The market remained under pressure ahead of expiry. Equity benchmarks fell more than 1 percent dragged by financials and pharma stocks while the BSE Midcap marginally outperformed key indices, down 0.5 percent.

The Sensex tanked 351.34 points to 27760.49 and the Nifty dropped 89.50 points to 8441.30. About 868 shares have advanced, 1668 shares declined, and 164 shares are unchanged on the Bombay Stock Exchange.

Expectation of an economic recovery is what was driving the markets, but it did not pan out as per expectation, said R Sreesankar, head – institutional equities, Prabhudas Lilladher.

According to him, commentary post Q4 of FY15 will be important to see.

HDFC kept its top position in the selling list, down 4 percent. Infosys, HDFC Bank, ICICI Bank, HUL, Sun Pharma, ONGC, Wipro, Dr Reddy’s Labs, Sesa Sterlite and Coal India dropped 1-3 percent while BHEL gained 2 percent.

Telecom stocks like Bharti Airtel and Idea Cellular traded higher as spectrum auctions concluded post 19 days and 115 rounds of bidding. The provisional amount committed by bidders stood at over Rs 1.09 lakh crore. Kotak remained positive on Bharti and Idea.

Gas based power plants like Torrent Power, GMR Infra and Lanco Infratech continued to be in focus, up 1-3 percent. The government last evening approved import of LNG for stranded gas based power plants. The government believes this move will save Rs 60,000 crore worth of investments on the verge of becoming NPAs.

Gujarat State Petronet jumped 5 percent as Citi said the company was likely to be the biggest beneficiary. GSPL’s earnings could increase by 28-30 percent against a 7 percent increase for GAIL’s earnings. The brokerage said there was a potential 10-18 mmscmd of additional LNG import.

United Bank of India gained 4 percent as the RBI has relaxed restrictions on credit disbursements of the bank.

Disclosure: Reliance Industries (which owns Reliance Jio) has acquired management control of Network18, which owns TV18 Broadcast and moneycontrol.com.

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