Local equities continue lackluster trade

Local equity benchmarks continued their lackluster trade in afternoon session, with frontline gauges breaching their crucial 38,850 (Sensex) and 11,500 (Nifty) levels. Selling in frontline blue chip stocks such Bajaj Auto, SBI and Asian Paints weighed down sentiment, while buying in Reliance Industries, ONGC and HCL Tech minimizing losses up to certain level. Anxiety remained on the street with Moody's Investors Service stating that India will be among the large emerging market sovereigns to have highest debt burden by 2021. It stated that the coronavirus pandemic-induced deterioration in growth and fiscal dynamics will leave most large emerging market sovereigns with higher debt burdens over the next few years. Traders also remain concerned as State Bank of India's (SBI) research report - Ecowrap has said that India’s real Gross domestic product (GDP) is expected to shrink by 10.9 percent in the current fiscal year (FY21).

On the global front, Asian markets were trading mostly in red with the profit taking after the equities soared in tandem with the firm trend in Wall Street overnight following the upbeat manufacturing data from US improving hopes for economic recovery. Back on street, in scrip specific developments, Mukand touched roof on getting nod to divest 51% stake in Mukand Sumi Special Steel and CG Power also trading at its upper circuit limit after Tube Investments of India (TII) decided to invest an additional Rs 100 crore in the company. 

The BSE Sensex is currently trading at 38826.63, down by 74.17 points or 0.19% after trading in a range of 38736.22 and 39036.76. There were 12 stocks advancing against 17 stocks declining, while 1 stock remains unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.05%, while Small cap index was up by 1.07%.

The top gaining sectoral indices on the BSE were Energy up by 1.75%, Telecom up by 1.06%, Oil & Gas up by 0.83%, Power up by 0.80% and Industrials was up by 0.66%, while Realty down by 0.99%, Bankex down by 0.99%, Auto down by 0.98%, Consumer Durables down by 0.74%, Consumer Discretionary was down by 0.53% were the losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 1.99%, ONGC up by 0.88%, HCL Tech up by 0.79%, Bharti Airtel up by 0.65% and Mahindra & Mahindra was up by 0.63%. On the flip side, Bajaj Auto down by 3.51%, SBI down by 2.29%, Asian Paints down by 2.21%, Axis Bank down by 2.18% and HDFC was down by 2.03% were the top losers.

Meanwhile, rating agency ICRA in its latest report has said that the relatively shorter payment timeframe of 10 years that has been granted to telecom companies (telcos) for payment of Adjusted Gross Revenue (AGR)-related dues will exert additional pressure on the cash flows, necessitates sizeable Average Revenue Per User (ARPU) hike, and may have longstanding impact on industry structure. ICRA said it would also leave limited room for network capital expenditure (capex) and expansion, especially for the relatively weaker player.

Assuming these payment terms are implemented on the balance amount to be paid, the report said the telcos will have to shell out an amount of Rs 9,000 crore by March 31, 2021 as upfront payment, followed by 10-annual installments of around Rs 12,000 crore at 8 per cent rate of interest starting February 2022 till February 2031. It also said these dues arose after the Supreme Court, in October last year, upheld the government's position on including revenue from non-core businesses in calculating the annual AGR of telecom companies, a share of which is paid as licence and spectrum fee to the exchequer.

According to the report, the telecom industry, after witnessing a turbulent phase with intense competition and pricing pressures, was on a path to recovery. It also said telecom operators announced substantial tariff hikes in December 2019, which along with moderation in capex intensity and deleveraging initiatives pointed towards greenshoots of recovery in the sector that was expected to result in expansion in cash flow generation. It noted that the tariff hikes have led to restoration of pricing power to the telcos and aided improvement in the operating metrics of the industry with growth in revenues and profit margins. It further said that the industry has been saddled with elevated debt levels amid consistently high capex requirements.

The CNX Nifty is currently trading at 11452.90, down by 17.35 points or 0.15% after trading in a range of 11430.40 and 11520.45. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 4.88%, Bharti Infratel up by 2.73%, Coal India up by 2.55%, Reliance Industries up by 2.03% and HCL Tech was up by 1.07%. On the flip side, Hero MotoCorp down by 3.76%, Bajaj Auto down by 3.66%, Grasim Industries down by 2.76%, Asian Paints down by 2.41% and SBI down was by 2.27% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 81.82 points or 0.32% to 25,103.03, Taiwan Weighted dropped 3.78 points or 0.03% to 12,699.50, Jakarta Composite lost 1.83 points or 0.03% to 5,308.85, Straits Times trembled 3.26 points or 0.13% to 2,535.29 and Shanghai Composite was down by 1.69 points or 0.05% to 3,408.92.

On the other side; KOSPI rose 14.82 points or 0.63% to 2,364.37 and Nikkei 225 was up by 109.08 points or 0.47% to 23,247.15.