MARKET WRAP: Sensex slumps 709 pts on global sell-off; Voda Idea slips 13%

All that happened in the markets today

Following global peers, the domestic equity market, too, came under heavy selling pressure and ended over 2 per cent lower on Thursday as the investor sentiment took a hit post US Federal Reserve's policy meeting outcome. The US central bank projected a 6.5 per cent decline in the US economy's gross domestic product (GDP) this year and a 9.3 per cent unemployment rate at the year's end. READ MORE

The S&P BSE Sensex tumbled 709 points or over 2 per cent to 33,538 while NSE's Nifty ended at 9,902, down 214 points or 2.12 per cent. 

In a major development, The Supreme Court on Thursday said the Department of Telecommunications' (DoT's) demand for Rs 4 trillion worth of adjusted gross revenue (AGR) dues from public-sector undertakings (PSUs) was "totally impermissible".  The court said DoT must consider withdrawing it. The Bench also asked private telecom operators to file affidavits giving details as to how they will pay the AGR dues. READ MORE

Telecom stocks ended lower. While Vodafone Idea slipped over 13 per cent to Rs 9.39, Bharti Airtel declined nearly 3 per cent to Rs 551.60 levels. All the PSU stocks, too, erased their gains and ended in the negative territory. 

Sectorally, all the indices on the NSE ended in the red with the Nifty PSU Bank index taking the biggest knock. The index fell nearly 4 per cent to 1,340.85 levels. Nifty Metal index fell around 3 per cent to 1,954.85 levels. 

Global markets

World shares took their biggest tumble in five weeks on Thursday as a sobering outlook from the US Federal Reserve challenged market optimism on the global economy, while bonds rallied on bets yet more stimulus would be needed to ensure recovery.

Asia saw a 10-day winning streak come to an abrupt finish and Europe’s main bourses all opened on a negative note.

MSCI’s 49-country index of world stocks slid 0.75 per cent in its largest daily loss in five weeks, while E-Mini futures for the S&P 500 fell 1.5 per cent to extend the previous session’s pullback on Wall Street.

In commodities, oil prices fell, hit by another record build-up in US crude inventories and the US Federal Reserve’s projections that the world’s biggest economy would shrink 6.5 per cent this year.

Brent crude futures erased Wednesday’s gains, falling 3.6 per cent, or $1.50, to $40.23 a barrel at the time of writing of this report. US West Texas Intermediate (WTI) crude dropped 4 per cent, or $1.57, to $38.03 a barrel.

(With inputs from Reuters)

4:08 PM

MARKET COMMENT:: Vinod Nair, Head of Research at Geojit Financial Services.

"The markets traded negative today on the back of data emerging globally and domestically. The awaited FOMC announcement drove the negativity in the international markets as the Fed diminished hopes of a quick recovery in the US economy, with their outlook. Major global indices were mostly in the negative. With infections continuing to remain high, the markets are also worried about any additional lockdown measures being imposed. This could mean offsetting the optimism of the last 2 weeks, where investors were banking on the economy restarting fully. Markets are in sync with global cues and with Nifty closing below the 10,000- mark, investors are advised to be cautious."

 

3:45 PM

SECTOR WATCH:: All the sectoral indices on the NSE end in the red

3:42 PM

MARKET AT CLOSE:: Losers and gainers on the S&P BSE Sensex

3:36 PM

CLOSING BELL

• The S&P BSE Sensex tumbled 709 points or over 2 per cent to 33,538 levels;
• NSE's Nifty slipped below 10,000 to end at 9,902-mark, down 214 points or 2.12 per cent

 

3:22 PM

EXPERT VIEW :: SC's AGR observations a setback for Voda Idea; others may survive

In any case, the payment of the AGR dues shouldn't pinch any of the major players except Vodafone Idea because the latter's debt to revenue is enormous (around Rs 30,000 crore of revenue and around Rs 1 lakh crore of debt). So, it would be a significant blow only for Vodafone Idea. But the companies with better balance sheet should be able to tide over this situation successfully. READ MORE

3:19 PM

Bharti Infratel defers board meeting on Indus Tower merger; stock tanks 10%

Shares of Bharti Infratel slipped 10 per cent to Rs 210 on the BSE on Thursday after the board deferred meeting pertaining to decision on the merger with Indus Towers as certain details it sought were delayed.

 

“Certain inputs that would have been required by the Board for it to deliberate and take a final decision have been delayed given the current environment. In view of the same, the said Board meeting has been rescheduled for a later date but definitely on or before the current long stop date of 24th June 2020," Bharti Infratel said in an exchange filing. READ MORE

3:16 PM

MARKET CHECK :: Nifty slips below 9,900-mark

3:15 PM

MARKET CHECK

3:10 PM

MARKET CHECK:: Top 5 gainers on the BSE at this hour

2:59 PM

Cholamandalam's investors should brace for higher asset quality pressure

As is the case with most non-banking financial companies (NBFCs), the stock of Chola­mandalam Investment and Finance Company (Chola) has fallen sharply because of the Covid-19 outbreak and its expected implications on business. At 1.5 times FY21 estimated earnings, the stock is now trading at a 49 per cent discount to its long-term one-year forward valuation mean. READ MORE

2:53 PM

NEWS ALERT :: RBI governor meets MD & CEOs of Credit Rating Agencies

During the meeting, among other matters, the following issues were discussed: 
 

1. Credit Rating Agencies’ assessment of the macroeconomic situation and outlook on various sectors including the financial sector;
 

2. Perspectives on the overall financial health of the entities rated by the CRAs
 

3. Major factors that affect credit ratings in current context; and
 

4. Feedback on ways to further strengthen the rating processes and engagement with key stakeholders

2:51 PM

Mukesh Ambani gets 552,000 shares in RIL rights issue

Ambani now holds 80.52 lakh shares or 0.12 per cent of RIL, up from 75 lakh shares held before the rights issue. His wife Nita and children Isha, Akash, and Anant too got 552,000 lakh shares each after they subscribed to the rights offering. They too hold 0.12 per cent each in the firm. READ MORE

2:46 PM

MARKET CHECK

2:44 PM

NEWS ALERT :: Monsoon reaches Maharashtra, Telangana, Chhattisgarh, says IMD

2:38 PM

EXPERT VIEW :: Ajay Bodke, CEO & Chief Portfolio Manager (PMS), Prabhudas Lilladher on AGR order

Any hopes that the Honourable Supreme Court would reconsider its judgment and reduce the amount of AGR dues for telecom operators looks to have been dashed completely. Even THE government's proposal of offering a 20-year window for staggered payments hasn't yet been accepted by the Court. It has asked the telcos to present their views on the timeframe to pay the dues and the nature of guarantees.

Whether the telcos would be comfortable offering personal guarantees of their directors as mentioned by the Court during the course of the hearing is the key. Any denial of personal guarantees may not be looked upon favorably by the Court. The directors of telcos are surely in the most unenviable position.

The Court is clearly miffed with DOT officials for raising gargantuan demands with what it termed as " ulterior motives" with respect to non-telecom PSUs like Gail, OIL, GNFC and PFC and has initiated action against them. It has hinted that there appears to be a concerted attempt at creating panic by issuing notices for recovery of lakhs of crores of rupees against non-telecom PSUs.

It does look like a treacherous path for the weak among the telecom operators who might survive but will be in an extremely weakened financial condition ever susceptible to emerging vulnerabilities.