 "Markets snap 3-day winning streak as telcos trip")
Markets snapped three day winning streak with telecom shares leading the decline after Reliance Industries announced the launch of Reliance Jio with disruptive pricing strategy in addition to voice calls and national roaming free of cost.
The S&P BSE Sensex ended down 29 points at 28,423 and the Nifty50 slipped 12 points to settle at 8,775. In the broader market, the BSE Midcap and Smallcap indices ended down 0.4% each, underperforming the benchmark indices.
Mukesh Ambani, Chairman of Reliance Industries (RIL) at the company's annual general meeting today announced the launch of Reliance Jio 4G services offering free voice calls for Jio customers and zero roaming charges across India from September 5 to December 31, 2016.
Commenting on today’s development, Jimeet Modi, CEO, Samco Securities said, “Reliance’s big bang launch of JIO is certainly a boon for the masses of the country but has left a big question mark on the possibilities for shareholder wealth creation in the long term. The investments to the tune of Rs 150,000 crs needs to generate at least 11.5% which is the implicit historical returns on its investments that it had delivered in the past, now therefore to accumulate net surplus of Rs 17,250 crs per annum seems a herculean task in the near future”.
In the macro-economic front, India’s gross domestic product (GDP) grew below expectations at a five-quarter low of 7.1% in the first three months of 2016-17, down from 7.9% in the fourth quarter of the previous financial year.
After a dismal economic growth in the first quarter, India's manufacturing activity expanded at a 13-month high in August, backed by surge in new orders and output, according to a private survey.
Globally, European stocks edged higher on rebound in crude oil prices after registering sharp losses during the previous trading session. Asian stocks were mixed as markets cautiously awaited the release of US jobs data scheduled tomorrow.
China's official manufacturing purchasing managers' index, a gauge of factory activity, rose to 50.4 in August, returning to expansionary territory, official data showed today.
Back home, Reliance Industries (RIL) chairman Mukesh Ambani announced at the 42nd AGM that Jio will be launched on September 5, offering customers free domestic voice calls and zero roaming charges. Shares of Reliance Industries slipped around 2%.
“This is the biggest gamble Reliance has played ever in its history the success of which will certainly decide the long term prospects for the company. Technology truly is deflationary in nature, the launch of JIO is the vindication of this fact. Technology is bringing down costs of almost everything eventually benefitting the end users leaving with them more money in their hands which further fuels consumption lead growth in the economy. The launch of JIO will certainly benefit the consumers and the country for sure” adds Jimeet Modi.
Shares of Bharti Airtel and Idea Cellular lost up to 10% on the bourses after the news. Idea Cellular has dipped 10% to Rs 83.70, its lowest level since October 30, 2012 on the BSE.
Country's largest carmaker Maruti Suzuki India (MSI) on Thursday posted a 12.2% rise in total sales in August at 1,32,211 units as against 1,17,864 units in the same month a year ago. The stock rose marginally.
Banking shares continued at their upward movement with the Nifty Bank and S&P BSE Bankex hitting their fresh 52-week highs on Thursday. Kotak Mahindra Bank and YES Bank hit a record high while Federal Bank touched a fresh 52-week high.
RBL Bank moved 3% higher to Rs 308 on the National Stock Exchange (NSE), extending its over 30% surge on its debut on Wednesday. Shares of the private sector lender was trading 41% premium against its issue price of Rs 225 per share.
Shares of select companies ended lower up to 3% on the BSE after the Competition Commission of India (CCI) has imposed more than Rs 6,700 crore penalties on 11 cement companies for cartelisation.
Hindustan Construction Company (HCC) rallied 20% to Rs 32.60, also its 52-week high on the BSE, after the Union Cabinet's decision requiring the government agencies to pay 75% of arbitral awards would result in company’s debt being reduced by half.
