Sensex up 273 pts; Bharti Airtel up 7%, Voda Idea dips 13% post AGR verdict
All that happened in the markets today
 "Markets")
Traders monitor BSE index at a brokerage firm, as the Sensex goes down, in Mumbai | PTI
The domestic stock market retreated from day's high but still settled in the positive territory on Tuesday amid buying in FMCG, auto, and metal counters. Telecom stocks were in focus after the Supreme Court ruled that telecom companies will be allowed 10 years for staggered payment of adjusted gross revenue (AGR) dues.
The apex court said the 10-year payment timeline will begin from April 1, 2021. Moreover, the telecom companies will have to pay 10 per cent of the dues by March 31, 2021. READ MORE
The S&P BSE Sensex ended at 38,900.80, up 273 points, or 0.71 per cent with Bharti Airtel (up over 6 per cent) being the top gainer and ONGC (down over 3 per cent) the biggest loser. NSE's Nifty ended at 11,470, up 83 points or 0.73 per cent. India VIX declined over 5 per cent to 21.67 levels.
Shares of Vodafone Idea settled nearly 13 per cent lower at Rs 8.89 on the BSE after the Supreme Court's decision on the AGR case. The company had sought 15 years to pay its AGR dues, including spectrum usage charge, license fee, interest, penalty, and interest on the penalty.
In the broader market, the S&P BSE MidCap index ended over 1 per cent higher at 14,832 levels while the S&P BSE SmallCap index ended at 14,413, up 77 points, or 0.54 per cent.
Sectorally, Nifty IT ended in the red - down 0.64 per cent to 17,814 levels, with 6 out of 10 constituents declining. On the other hand, Nifty Metal index rallied the most - up over 3 per cent to 2,496.75 levels, followed by Nifty Pharma - up over 2 per cent.
The apex court said the 10-year payment timeline will begin from April 1, 2021. Moreover, the telecom companies will have to pay 10 per cent of the dues by March 31, 2021. READ MORE
The S&P BSE Sensex ended at 38,900.80, up 273 points, or 0.71 per cent with Bharti Airtel (up over 6 per cent) being the top gainer and ONGC (down over 3 per cent) the biggest loser. NSE's Nifty ended at 11,470, up 83 points or 0.73 per cent. India VIX declined over 5 per cent to 21.67 levels.
Shares of Vodafone Idea settled nearly 13 per cent lower at Rs 8.89 on the BSE after the Supreme Court's decision on the AGR case. The company had sought 15 years to pay its AGR dues, including spectrum usage charge, license fee, interest, penalty, and interest on the penalty.
In the broader market, the S&P BSE MidCap index ended over 1 per cent higher at 14,832 levels while the S&P BSE SmallCap index ended at 14,413, up 77 points, or 0.54 per cent.
Sectorally, Nifty IT ended in the red - down 0.64 per cent to 17,814 levels, with 6 out of 10 constituents declining. On the other hand, Nifty Metal index rallied the most - up over 3 per cent to 2,496.75 levels, followed by Nifty Pharma - up over 2 per cent.
4:15 PM
EXPERT COMMENT:: Vinod Nair, Head of Research at Geojit Financial Services
"Indian markets exhibited heightened volatility today following the publishing of GDP data and SC ruling in the AGR case for telecom companies. Global cues were positive following Chinese factory data which indicated demand increasing. Liquidity, driven by high FII inflows in August, has provided good support for the markets, in spite of general concern regarding high valuations in some sectors and stocks. The market is expecting a slow uptick in economic activity which has resulted in stock-specific moves, where there is earnings visibility. Investors need to be prepared to handle volatility in the near term."
3:43 PM
SECTOR WATCH:: Nifty IT slips over 0.6%
3:42 PM
MARKET AT CLOSE:: Gainers and losers on the S&P BSE Sensex
3:36 PM
CLOSING BELL
The S&P BSE Sensex ended 273 points or 0.7 per cent higher at 38,901 levels while NSE's Nifty ended at 11,470, up 83 points or 0.73 per cent.
3:26 PM
India's power output falls for sixth straight month in August, show data
India's electricity generation fell for the sixth straight month in August, provisional government data showed, driven by a slump in power use in industrial western states such as Maharashtra and Gujarat in the second half of the month. August power generation fell 0.9%, a Reuters analysis of daily load despatch data from federal grid operator POSOCO showed, slower than the 1.8% decline seen in July. READ MORE
3:19 PM
MARKET CHECK:: Top 5 losers on the BSE at this hour
3:10 PM
Videocon Industries promoters seek debt recast package from lenders
In a last ditch effort to save the company from going to liquidation, the promoters of Videocon Industries have sought a debt restructuring package which would result in banks getting back Rs 33,400 crore from the company over the next few years. The company was sent to the National Company Law Tribunal (NCLT) for debt resolution in December 2017 and has almost shut operations. READ MORE
3:01 PM
Expert View :: Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities on AGR Verdict
The AGR verdict is quite positive for Bharti Airtel as it has got 10 years to pay the spectrum charges out of which it needs to pay only 10% upfront. Bharti has already provided for Rs 47,000 cr in its books hence there should no negative impact on P&L going forward. Impact if any could be positive on any reversal of provision. As per our estimates the company should be generating healthy free cash flows from FY21 onwards and in this context annual AGR payment of Rs 4400-4700 cr should not be an issue. We remain quite optimistic on Bharti Airtel with a price target of Rs 710
The Supreme Court verdict is not as beneficial to Vodafone Idea as it is to Bharti Airtel. Vodafone was looking forward for a 20 year payment cycle which has now reduced to 10 years. Out of the total AGR dues of Rs 58,000 cr Vodafone Idea has paid only Rs 7,900 cr till now. Considering the high annual interest, depreciation and amortization cost the annual AGR dues could put further strain on the cash flows of the company. However, if there is across the board increase in tariffs by the three players then it could provide reprieve to Vodafone Idea in future.
In regards to the spectrum obligation of insolvent companies the Supreme Court has referred the matter to NCLT. In worst case there could be further liability on Reliance Jio and Bharti Airtel who have taken the spectrum from Reliance Communication, Videocon and Aircel. After the Supreme Court verdict the hangover of AGR case is removed and going forward we need to watch how telecom operators increase tariffs.
The Supreme Court verdict is not as beneficial to Vodafone Idea as it is to Bharti Airtel. Vodafone was looking forward for a 20 year payment cycle which has now reduced to 10 years. Out of the total AGR dues of Rs 58,000 cr Vodafone Idea has paid only Rs 7,900 cr till now. Considering the high annual interest, depreciation and amortization cost the annual AGR dues could put further strain on the cash flows of the company. However, if there is across the board increase in tariffs by the three players then it could provide reprieve to Vodafone Idea in future.
In regards to the spectrum obligation of insolvent companies the Supreme Court has referred the matter to NCLT. In worst case there could be further liability on Reliance Jio and Bharti Airtel who have taken the spectrum from Reliance Communication, Videocon and Aircel. After the Supreme Court verdict the hangover of AGR case is removed and going forward we need to watch how telecom operators increase tariffs.
2:56 PM
Power consumption almost at normal, slump narrows to just 0.85% in Aug
The slump in overall power consumption has narrowed to just 0.85 per cent in August at 110.57 billion units (BU) amid considerable rise in economic activities and raised hopes that it would surpass normal level this month. READ MORE
2:47 PM
Future Retail hits 10% lower circuit after rallying 38% in 3 sessions
The world’s largest sovereign wealth fund The Government Pension Fund Global sold 9.5 million shares, representing 1.75 per cent stake of Future Retail at Rs 158.61 per share on the NSE, bulk deal data show. The sovereign wealth fund held 12.35 million shares, or 2.28 per cent stake in the company at the end of June, shareholding pattern data revealed. The name of the buyers was not ascertained immediately. READ MORE
2:38 PM
MARKET CHECK:: Top 5 gainers on the BSE at this hour
2:31 PM
Pricey valuation pull down P&G Hygiene stock despite strong Q4 results
Procter & Gamble Hygiene & Health Care’s (P&G Hygiene) June 2020 quarter (Q4) results surprised the Street with strong profits, despite Covid-led disruptions. Yet, the stock has shed 1.2 per cent since the result was announced on Tuesday last week. READ MORE
2:16 PM
Voda Idea in danger of becoming a 'zombie' telco; may just about survive
The Supreme Court order brings some clarity to the telecom sector. The telcos will have to pay their AGR dues over a period of 10 years with the payment being made every February. The stock market reaction so far has been positive in terms of the Bharti Airtel stock rising, and negative for the Vodafone Idea stock, which has fallen sharply. READ MORE
2:07 PM
Rupee Closing
Rupee ends stronger at 72.86 per US dollar vs Monday's close of 73.61/$
1:59 PM
Decoded: Why Sebi's new margin pledge norms have rattled brokerages
Many are expecting the trading volumes to come down in the cash segment. This has less to do with the new pledging system and more to do with the new margin norms. Under the new margin norms, Sebi has virtually put an end to excessive leverage trades. The regulator has directed brokers to collect higher margins from their client. READ MORE
Topics : Fiscal Deficit Markets GDP data Adjusted gross revenue Bharti Airtel Vodafone Idea Reliance Jio Maruti Sukuzi Tata Motors MARKET WRAP
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First Published: Sep 01 2020 | 7:41 AM IST
