Developments in the Telecom Sector, Global Stock Market Drivers, and Top Cues in Focus Today

Wed, 30 Oct Pre-Open

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On Tuesday, Indian share markets moved sharply higher amid positive global cues and better-than-expected September quarter earnings. The BSE Sensex zoomed to a 4-month high, up over 660 points intraday, while the Nifty hit the 11,800-mark for the 1st time since July 5.

Investor sentiments were boosted after media reports stated that Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman are planning a series of tax alignments for equities in the coming weeks.

Optimism over US-China trade deal and the European Union extending Brexit deadline to 31 January 2020, also boosted sentiment.

At the closing bell on Tuesday, the BSE Sensex stood higher by 582 points (up 1.5%) and the NSE Nifty closed higher by 160 points (up 1.4%).

On the sectoral front, gains were largely seen in the automobile sector, metal sector and energy sector.

Top Stocks in Action Today

Tata Power share price will be in focus today as its joint venture (JV) - Industrial Energy has signed pacts with Tata Steel to acquire a captive gas-based power plant and a diesel project in Kalinganagar, Odisha for around Rs 9.2 billion.

Hikal share price will also be in focus today as the company has resumed normal production at Taloja site post the 100% restoration of water by MIDC. MIDC had cut 50% of the water supply last quarter which affected the company's operations in Q2FY20 resulting in lower production and sales.

Market participants will also track Graphite India share price, Lakshmi Machine share price, and Quess Corp share price as these companies will announce their Q2FY20 results later today.

Results Corner

PNB Housing Finance has reported 64.3% rise in its net profit at Rs 3,420.9 million for the September quarter as compared to Rs 2,082.6 million for the same quarter in the previous year.

HDFC AMC has reported 78.8% rise in its net profit at Rs 3,682.4 million for the quarter under review as compared to Rs 2,059.1 million for the same quarter in the previous year.

Total income of the company increased by 6.6% at Rs 5,490.7 million for Q2FY20 as compared Rs 5,152 million for the corresponding quarter previous year.

Reports state that the key reasons for this surge in profitability was the reduction in commissions and fees paid to distributors. Net fee expenses were lower by 44% in Q2.

The company's EBITDA margins stood at 91% in Q2 compared with 89% in the year-ago quarter.

However, growth in revenue was lower as asset management fees have been reduced, even as inflows slowed marginally. Revenue rose about 3.5% year-on-year in Q2.

You can also read our recently released Q2FY20 results of: ICICI Bank, Maruti Suzuki, State Bank of India, Pfizer, Control Print.

Saudi Arabia to Invest in India

Prime Minister Narendra Modi said on Tuesday Saudi Arabia will invest in downstream oil and gas projects in India as part of a strategic partnership between the two countries, a move that would also help the world's top oil exporter find a stable outlet for its crude.

Saudi Aramco along with UAE's national oil company ADNOC has signed a preliminary deal with Indian state-run companies for a 50% stake in a planned 1.2 million barrels per day (bpd) mega refinery on the country's west coast.

The Indian government also plans to sell its entire 53.3% stake in state-run refinery Bharat Petroleum Corp, at an estimated price of US$ 10 billion.

Bharti Airtel Defers Q2FY20 Results

Telecom operator Bharti Airtel announced yesterday that it has deferred its September quarter results till November 14 saying it needed more clarity on adjusted gross revenue (AGR) matter.

In a regulatory filing, the company said the management recommended to the Board of Directors to defer September quarter results announcement till November 14, 2019 on account of the fact that more clarity is needed on the AGR matter arising out of recent judgement of Hon'ble Supreme Court.

The statement added, "the company is approaching DoT to seek clarity on the total amounts involved and request for their support to deal with this adverse outcome."

In a major blow to telecom companies Bharti Airtel and Vodafone-Idea, the supreme court last week ruled that the existing definition of AGR will prevail.

The verdict allows the government to recover Rs 920 billion of AGR from the financially stressed telecom industry that includes many operators who have already gone out of business or are under insolvency proceedings.

The payout by telcos could rise to an estimated Rs 1.3 trillion once spectrum usage charges (SUC) linked to AGR are taken into account.

Industry body Cellular Operators Association of India (COAI) said the ruling will deal a "disastrous blow" to the industry, given its precarious financial condition.

According to the new telecom policy, telecom licensees are required to share a percentage of their adjusted gross revenue (AGR) with the government as annual license fee.

In addition, mobile telephone operators were also required to pay spectrum usage charges for the use of radio frequency spectrum allotted to them.

How all this pan out remains to be seen. Meanwhile, we will keep you updated on the latest developments from this space.

Global Stock Market Drivers

Asian share markets crawled to a three-month peak on Tuesday after Wall Street hit all-time highs amid hopes of progress in Sino-US trade talks and for another dose of policy stimulus from the Federal Reserve this week.

On Monday, President Donald Trump said US was ahead of schedule to sign a significant part of the trade deal with China. The US trade representative also said the US was studying whether to extend tariff suspensions on US$ 34 billion of Chinese goods set to expire on December 28 this year.

On the commodities front, oil prices fell for the second day on Tuesday as investors awaited US crude inventory data for more insight into oil demand trends.

Prices rose sharply last week amid a decline in US inventories and signs of an easing in the US-China trade war but worries on Monday about weaker economic growth offset hopes of a rise in oil demand even if trade talks progress.

As per the Economic Schedule released by Vijay Bhambwani, editor of Weekly Cash Alerts, here are the important events due later today:

• Germany - October CPI Month-on-Month
• USA - Q3 GDP Quarter-on-Quarter
• Australia - Q3 CPI Quarter-on-Quarter

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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