Sensex survives 2G scare...Nifty ends above 5250
BSE Sensex ended at 17,432, up 131 points from the last close. It earlier touched a day's high of 17,504 and hit day's low of 17,308. The Nifty settled at 5,270, up 34 points. It hit a day’s high of 5,290 and day’s low of 5,226.
It was another good session for the Indian market, notwithstanding an intraday interruption sparked by a disruptive Supreme Court verdict on the 2G scam. With this, the main indices have now gained for three successive sessions, more than reversing Monday's big crash. The apex court's ruling on the 2G case didn't have a material impact on the overall sentiment, although shares of few companies hit by that order did feel the heat.
The BSE Sensex ended at 17,432, up 131 points from the last close. It earlier touched a day's high of 17,504 and hit day's low of 17,308. The Nifty settled at 5,270, up 34 points. It hit a day’s high of 5,290 and day’s low of 5,226.
Despite the volatility the market breadth was in favor of the bulls. On the BSE, 1573 stocks advanced as against only 1295 declining stocks and 126 stocks remained unchanged.
The INDIA VIX on the NSE was up ~3.5% to close at 23.69. The index hit day's high of 24.26 and hit day’s low of 21.88.
Among the 30 constituents of the Sensex, Bharti Airtel, DLF, Sterlite, Wipro, Gail and Hindalco were among the major leaders. On the other hand, Cipla, ITC, Jindal Steel, Tata Motors and Sun Pharma ended in the negative terrain.
Among the BSE sectoral indices, the Teck index was the top gainer, up 2%. The IT index gained 1.5%, while the Metal index was up 1.4%. Capital Goods and Realty indexes rose 1.2% or more. On the other hand, BSE Pharma index lost 0.6% and BSE Consumer Durables index fell 0.4%.
The BSE Mid-Cap index rose ~0.6% while the BSE Small-Cap index gained 0.5%.
The markets turned volatile briefly after the Supreme Court scrapped 122 2G licences issued under the tenure of former Telecom Minister A. Raja. However, traders used the dip to buy the market.
The telecom shares of the companies affected by the apex court's verdict tumbled but Bharti Airtel gained on speculation it might benefit from the re-allocation of the 2G licences. Shares of RCOM, DB Realty, Unitech, Videocon Industries and TTML were among the top losers.
"The rising market brings back memories of 2007. Risk appetite is back on the table as global liquidity, unlocked by easy monetary policies, chases high returns after a tumultuous 2011. The trigger for Wednesday’s worldwide ‘risk on’ rally came from upbeat manufacturing data.
How Supreme Court 2G verdict impacts stakeholders
About 7 per cent of over 700m subscribers will get affected by this verdict and will have to switch their service provider. This is around 61 m subscribers. The Supreme Court cancelled 122 licenses for mobile networks issued during A Raja’s tenure as Telecom Minister on Thursday. While consumers have been given a window to change service providers, companies like Uninor and their lenders are worst hit. The Supreme Court has asked the telecom regulator TRAI to make fresh recommendations on 2G licenses allocation.
Here is what it means for stakeholders:
• All 22 licences held by Uninor were cancelled by the Supreme Court order. The company’s shares plunged 7 per cent. DB Realty, which partnered with Etisalat to roll out telecom services, tanked over 5 per cent. The court scrapped 13 licenses of Swan.
• Idea Cellular shares fell over 3 per cent as it saw 9 licences scrapped. Idea’s market share of 6.8 per cent would be affected as a result.
• Companies could appeal through a review petition. Analysts at CLSA, securities firm, expect most companies to challenge the verdict.
• Shares of Bharti Airtel rose 4 per cent as the largest player has an opportunity to expand market share. It can lure new subscribers. Vodafone is another beneficiary of this decision.
• About 7 per cent of over 700m subscribers will get affected by this verdict and will have to switch their service provider. This is around 61 m subscribers.
• TRAI said that customers less than 90 days old will not be able to move to a new service provider on the same number using number portability. TRAI would have to issue necessary directives for the company to inform their customers and have to devise ways for customers less than 90 days to use number portability, according to TRAI Chairman JS Sharma.
• Customers will have a window of four months to change the service provider.
• Shares of public sector banks were largely affected as they had maximum exposure to the telecom sector. Banks like State Bank of India, the nation’s largest lender, said that loan to the tune of Rs 1,000 crore would get affected. Other banks like Punjab National Bank and IDBI Bank have a significant exposure.
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