Sensex Opens Marginally Up; Bharti Airtel Spikes Over 8.5% on Acquisition News

Thu, 23 Feb 09:30 am

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Asian equity markets are lower today as Japanese and Hong Kong shares fall. The Nikkei 225 is off 0.35%, while the Hang Seng is down 0.53%. The Shanghai Composite is trading down by 0.35%. Stock markets in the US finished their previous session on a negative note.

Meanwhile, Indian share markets have opened the trading day marginally higher. The BSE Sensex is trading higher by 71 points while the NSE Nifty is trading higher by 21 points. The BSE Mid Cap index and BSE Small Cap index both have opened the day up by 0.2% & 0.1% respectively.

Sectoral indices have opened the day on a mixed note with capital goods stocks and healthcare stocks witnessing selling pressure. While, oil & gas stocks and realty stocks are among the top gainers on the BSE. The rupee is trading at 66.96 to the US$.

Telecom stocks have opened the day on a mixed note with Bharti Airtel and Reliance Communications being the most active stocks in this space. As per an article in a leading financial daily, Bharti Airtel, through its subsidiary Bharti Airtel Services has acquired a strategic equity stake in Seynse Technologies Pvt. Ltd., a Financial Technology (FinTech) company.

Seynse has created a digital lending platform 'Loan Singh' that enables easy loans for credit-worthy yet underserved borrowers. Its platform is powered by a proprietary credit engine and advanced machine learning capacity.

Further, Bharti Airtel plans to use Seynse's capabilities to bring targeted products and solutions to its more than 270 million customers. The deal is valued at over Rs 1 billion, the reports noted.

Moreover, Airtel could leverage the technology platform by tying it with the payments bank business. Airtel Payments Bank started operations in November last year. Bharti Airtel has committed Rs 30 billion of investments as part of plans to build a national digital payments ecosystem with over 5 million merchants. Over 1 million merchants have already been signed up across India.

In the meanwhile, it was reported that Bharti Airtel has entered into a definitive agreement with Telenor South Asia Investments Pte Ltd to acquire Telenor India Communications Private Ltd.

As the part of the agreement, Airtel will acquire Telenor India's running operation in seven circles, including Andhra Pradesh, Bihar, Maharashtra, Gujarat, UP East and West and Assam. These circles represent a high population concentration and therefore offer high potential for growth.

Moreover, the acquisition will include the transfer of all Telenor India's assets and customers, which will boost the company's customer case and network. Also, these seven markets will give an additional 43.4 MHz spectrum in the 1800 MHz band to Airtel, the reports noted.

The move comes at a time when new entrant Reliance Jio has acquired 100 million users and the market is awaiting response on a potential Vodafone-Idea merger. Reacting to the news, Bharti Airtel share price surged as much as 8.5%.

Moving on to the news from information technology stocks. According to an article in Moneycontrol, US-based retail giant JC Penney Co. Inc., which hands out millions of dollars' worth software business every year to the likes of Tata Consultancy Services Ltd (TCS) and Infosys Ltd, plans to cut back on outsourcing to India.

The move comes on the back of the company's broader plans to 'insource' and is taken in order to keep its competitive edge intact against online rivals such Amazon.com etc. Some large IT customers like US retailers Lowe's Companies Inc. and JC Penney are also looking to India to set up their own technology outposts in order to insource work back from Indian information technology firms.

Moreover, this also comes at a time when the Indian IT companies are facing their slowest period of growth in a decade as their core businesses are facing disruptions from technology shifts and from potential HYPERLINK "https://www.equitymaster.com/archives.asp?reco=1&rsch=1&splrpt=1&rd=1&von=1&ov=1&cotd=1&5min=1&dr=1&sfth=1&ht=1&dph=1&recosrv=19,64,14,11,71,21&keyw=visa" new visa regulations in their largest market, the US.

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Large Indian IT companies, on an average, generate more than 50% of their revenues from the US clients. They have built a strong client base over the years in the US market. Going forward, with the increased US exposure, whether the IT companies look out for other means to reduce costs or protect margins will be the key thing to watch out for.

To know more about the company's financial performance, subscribers can access to TCS' latest result analysis (subscription required) and TCS stock analysis on our website.

TCS share price opened the day up by 0.6%.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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