Telecom stocks in demand

Key benchmark indices retained positive zone in early afternoon trade as the market sentiment was boosted after latest data showed that inflation based on the wholesale price index (WPI) eased to a 7-month low of 5.05% in January 2014. The barometer index, the S&P BSE Sensex, was up 76.22 points or 0.38%, up about 100 points from the day's low and off close to 45 points from the day's high. The market breadth, indicating the overall health of the market, was positive. Gains in Asian stocks underpinned sentiment on the domestic bourses.

Telecom stocks rose as the auction of spectrum in the 1800 MHz and 900 MHz band that began on 3 February 2014 ended on Thursday, 13 February 2014. Bharti Airtel rose after the company said it has acquired 115.0 MHz spectrum for a total consideration of Rs 18530 crore in the just concluded spectrum auction conducted by the Government of India. Idea Cellular gained after the firm said that the winning of a total of 65.2 MHz of spectrum in the auction gives the company necessary impetus to expand the network in Delhi to 3G on 900 MHz and the launch 4G in 8 of its key revenue markets at an appropriate juncture. Index heavyweight Reliance Industries (RIL) rose after the company announced that its telecom unit Reliance Jio Infocomm has successfully acquired the right to use spectrum in 14 key circles across India on the 1800 MHz band in the recently concluded spectrum auction. Realty stocks edged lower.

The market edged higher in early trade on firm Asian stocks. The Sensex regained positive terrain after slipping into the red to hit fresh intraday low in morning trade. The 50-unit CNX Nifty regained psychological 6,000 mark after falling below that mark for a brief period in morning trade. The Sensex retained positive zone in early afternoon trade.

The market sentiment was boosted by data showing that foreign funds were net buyers of Indian stocks on Thursday, 13 February 2014. Foreign institutional investors (FIIs) bought shares worth a net Rs 399.40 crore on Thursday, 13 February 2014, as per provisional data from the stock exchanges.

At 12:20 IST, the S&P BSE Sensex was up 76.22 points or 0.38% to 20,269.57. The index jumped 119.67 points at the day's high of 20,313.02 in early trade. The index fell 27.27 points at the day's low of 20,166.08 in morning trade.

The CNX Nifty was up 19.15 points or 0.32% to 6,020.25. The index hit a high of 6,033.30 in intraday trade. The index hit a low of 5,990.80 in intraday trade, its lowest level since 6 February 2014.

The BSE Mid-Cap index was 11.36 points or 0.18% to 6,316.14. The BSE Small-Cap index was up 18.29 points or 0.29% at 6,300.78. Both these indices underperformed the Sensex.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,107 shares rose and 1,096 shares fell. A total of 126 shares were unchanged.

Among the 30-share Sensex pack, 16 stocks fell and rest rose. TCS (up 1.92%), Tata Motors (up 2.21%) and NTPC (up 1.38%) edged higher from the Sensex pack.

Telecom stocks rose as the auction of spectrum in the 1800 MHz and 900 MHz band that began on 3 February 2014 ended on Thursday, 13 February 2014.

Reliance Communications rose 1.81%.

Idea Cellular gained after the company said that the winning of a total of 65.2 MHz of spectrum in the auction gives the company necessary impetus to expand the network in Delhi to 3G on 900 MHz and the launch 4G in 8 of its key revenue markets at an appropriate juncture. The stock was up 1.79%. Idea Cellular made the announcement after market hours on Thursday, 13 February 2014.

In 8 of its leadership markets covering 64% of revenues, Idea now has the ability to launch 4G services in Kerala with 10 MHz, and in Maharashtra & Goa, Andhra Pradesh, Karnataka, Madhya Pradesh & Chhattisgarh, Punjab, Haryana, and North East, using 5 MHz of contiguous 1800 MHz spectrum won in each of these service areas, besides the right to deploy the 3G services with 5 MHz on the 900 MHz band in the strategically significant metro market of Delhi, Idea Cellular said in a statement.

With Delhi metro 900 MHz, the company now has the ability to extend its 3G services to 12 circles covering nearly 79% of its gross revenues, Idea Cellular said. The company has also acquired additional top up spectrum in 1800 MHz in Mumbai metro and Madhya Pradesh & Chhattisgarh -- 2 MHz each, Maharashtra -- 4 MHz, Punjab -- 3 MHz, Gujarat -- 1.6 MHz, Andhra Pradesh and Haryana -- 1 MHz each, and Delhi -- 0.6 MHz, Idea Cellular said in a statement.

With this additional spectrum auction win, Idea's 6 strategic markets of Kerala, Andhra Pradesh, Maharashtra & Goa, Madhya Pradesh & Chhattisgarh, Punjab, and Haryana, representing 53% of its revenues, will seamlessly experience all three Mobility technologies - GSM, 3G, and 4G services in the coming years, Idea Cellular said in a statement.

Idea Cellular said that the total accepted bid value is approximately Rs 10400 crore at Rs 160 crore/MHz, primarily for its 9 strategic service areas. This bid price will be covered within less than two years in EBITDA terms, based on the current EBITDA trends of these 9 strategic markets, the company said. After the initial payment of approximately Rs 3100 crore, the balance amount will be paid in ten equal installments after the first two year moratorium including interest at the rate of 10%, Idea Cellular said in a statement.

Bharti Airtel rose 1.09% after the company said it has acquired 115.0 MHz spectrum for a total consideration of Rs 18530 crore in the just concluded spectrum auction conducted by the Government of India. The company made the announcement after market hours on Thursday, 13 February 2014.

Bharti Airtel said it will make an upfront payment of Rs 5425 crore, with the balance to be paid in ten annual installments of Rs 1310 crore each, commencing two years from now, the company said.

Bharti Airtel said that the company's spectrum acquisition is in line with its strategy of building a robust network of the future and enhancing its leadership position in the fast growing data segment.

The company plans to roll-out high speed 4G networks in various circles using FD-LTE technology in the 1800 MHz band besides its existing TD-LTE roll-out in the 2300 MHz band, giving it a pan-India 4G footprint, Bharti Airtel said in a statement.

Bharti Airtel complimented DoT and TRAI on the successful outcome of the auction. It said that the auction has lent credence to the industry's position that reasonable reserve prices ensure successful auctions, while high reserve prices are counterproductive. It added that in most circles the auction in 1800 MHz showed a balanced approach between the revenue for the exchequer and industry viability due to ample spectrum being put up for auctions. However, the auction in 900 MHz band resulted in artificial and unrealistic prices on account of shortage of spectrum and the unenviable position of the incumbents who were forced to bid for this spectrum to protect the interest of their customers and the huge investments made by them, Bharti Airtel said in a statement.

Index heavyweight Reliance Industries (RIL) rose 1% after the company announced during market hours its telecom unit Reliance Jio Infocomm has successfully acquired the right to use spectrum in 14 key circles across India on the 1800 MHz band in the recently concluded spectrum auction conducted by DoT, Government of India. RJIL plans to use this spectrum, ranging from 2x5 MHZ to 2x7 MHZ in each of these 14 circles, in conjunction with its pan India 2300 MHz spectrum to address the expected surge in demand for digital services as well as to enhance in building coverage. RJIL plans to provide seamless 4G services using FDD-LTE on 1800 MHZ and TDD-LTE on 2300 MHz through an integrated ecosystem. RJIL has won the spectrum in the 1800 MHz band in all circles as per details given below, where it participated in the auction and where full contiguous block of 5 MHz spectrum was available: Through this acquisition, RJIL's total equivalent spectrum footprint has increased from 440 MHz to 597.6 MHz (inclusing uplink & downlink).

Mukesh D. Ambani, Chairman and Managing Director, Reliance Industries Limited said: "With this acquisition, Reliance Jio will be the holder of the largest quantum of liberalized spectrum and with the longest residual spectrum life. Reliance Jio's seamless 4G services using FDD-LTE on 1800 MHz and TDD-LTE on 2300 MHz through an integrated ecosystem, aims to provide unparalleled high quality access to innovative and empowering digital content, applications and services".

Cost to RJIL for the right to use this technology agnostic spectrum for a period of 20 years is Rs 11054 crore. RJIL plans to opt to make an upfront payment of 33% with the balance payable in 10 equal annual instalments after a two year moratorium, as per the provisions of the Notice Inviting Applications issued by DoT.

RJIL has acquired the 1800 MHz spectrum at 31% premium to reserve price. Winning bidders of the 900 MHz spectrum paid between 55% to 110% premium over the reserve price.

RJIL is deploying an enhanced packet core network to create futuristic high capacity infrastructure to handle huge demand for data and voice. In addition to high speed data, the 4G network will provide voice services from / to non-RJIL networks. There are several mobile phones and devices available today which have the capability to operate both TD-LTE and FD-LTE technologies in the 1800 MHz and 2300 MHz bands as well as conventional 2G / 3G networks. Rapid strides in global LTE rollouts and introduction of several new chipsets is making LTE enabled smart mobile phones and devices more affordable. In any case, Wi-Fi enabled 2G / 3G device can access RJIL's services through an affordable pocket router, the company said.

Realty stocks edged lower. D B Realty (down 0.52%), HDIL (down 0.54%) and Sobha Developer (down 1.85%) declined. Unitech rose 0.4%.

DLF declined 0.07% ahead of its Q3 results today, 14 February 2014.

Future Retail spurted 14.54% after the company reported a net profit of Rs 21.74 crore in the quarter ended 31 December 2013 as against net loss of Rs 20.41 crore in the quarter ended 31 December 2012. The result was announced after market hours on Thursday, 13 February 2014.

Future Retail's total income rose 80.81% to Rs 2331.33 crore in the quarter ended 31 December 2013 over the quarter ended 31 December 2012.

Future Retail said that the scheme of Amalgamation and Arrangement of Future Value Retail (FVRL), a wholly owned subsidiary company with the company under the provisions of section 391-394 of the Companies Act,1956 for merger of FVRL with effect from 1 July 2012 has been given effect in accounts for the quarter ended 31 December 2013 after receipt of approval of High Court of Judicature at Bombay on 31 January 2013 and scheme has been made effective upon filing of the certified copy of court order with Registrar of Companies, Maharashtra on 11 February 2014. Pursuant to the same all the assets and liabilities of FVRL merged and vested in the company. In view of the same, the financial results of the present quarter and twelve months ended 31 December 2013 include performance of the FVRL. Accordingly, the previous period's figures are not comparable, Future Retail said.

In the foreign exchange market, the rupee edged higher against the dollar on global risk-on sentiment. The partially convertible rupee was hovering at 62.275, compared with its close of 62.42/43 on Thursday, 13 February 2014.

Inflation based on the wholesale price index (WPI) provisionally rose 5.05% in January 2014 as compared to 6.16% (provisional) for December 2013 and 7.31% in January 2013. Build up inflation rate in the financial year so far was 5.17% compared to a build up rate of 5.78% in the corresponding period of the previous year. The government unveiled data on inflation based on the wholesale price index (WPI) for January 2014 at 12 noon today, 14 February 2014.

Core inflation or non-food manufacturing inflation edged up to 3.04% in January 2014, from 2.75% in December 2013, the latest data showed.

Finance Minister P Chidambaram will present the Vote-on-Account or interim budget for the first four months of 2014/15 on 17 February 2014. The objective of a Vote-on-Account is to get Parliament's nod for expenditure to be incurred in the months prior to elections. The next full-fledged budget will be presented by the new government which comes to power after the Lok Sabha polls in April-May 2014.

The Reserve Bank of India next undertakes monetary policy review on 1 April 2014. Sighting elevated consumer price inflation, the Reserve Bank of India raised its key lending rates by 25 basis points after Third Quarter Review of Monetary Policy for 2013-14 on 28 January 2014.

Asian stocks edged higher on Friday, 14 February 2014, as US stocks rose overnight. Key benchmark indices in China, Hong Kong, South Korea, Indonesia and Taiwan fell by 0.18% to 0.68%. Key benchmark indices in Japan and Singapore fell by 0.02% to 1.59%.

China's inflation stayed subdued in January while factory-gate prices extended the longest drop since the 1990s, in a sign of moderating demand in the world's second-largest economy. The consumer price index rose 2.5% from a year earlier, the National Bureau of Statistics said today in Beijing, the same pace as in December. The producer-price index fell 1.6%.

Trading in US index futures indicated that the Dow could fall 16 points at the opening bell on Friday, 14 February 2014. US stocks rose on Thursday as earnings and a $45.2 billion takeover of Time Warner Cable Inc. overshadowed an unexpected drop in retail sales.

Receipts at US retailers declined 0.4% in January amid bad weather and uneven progress in the labor market, a report yesterday showed, signaling the economy was off to a slow start this year. The decline was the biggest since June 2012. A Labor Department report showed the number of Americans filing applications for unemployment benefits rose by 8,000 to 339,000 in the week ended Feb. 8.

Federal Reserve Chairwoman Janet Yellen's scheduled appearance before the Senate Banking Committee on Thursday, 13 February 2014, was postponed due to a snowstorm.

The Federal Open Market Committee (FOMC) next undertakes monetary policy review on 18-19 March 2014. After a monetary policy review, the FOMC on 29 January 2014 announced it will reduce monthly bond purchases by another $10 billion to $65 billion. The Fed also signaled that it is likely to keep reducing bond purchases in the coming months, citing a pickup in US economic activity and improvement in the US labor market.

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