Local equities trade slightly in green; Nifty tad above 11,700 mark

Local equity benchmarks were trading slightly in green in morning session, with frontline gauges trading above their crucial 11,700 (Nifty) and 39,100 (Sensex) levels. Traders were seen piling positions in Realty, Energy and Oil & Gas sector, while selling was witnessed in IT, Healthcare and BANKEX sector stocks. Some support came in with Finance Ministry’s statement that the effective taxpayer base grew 13.5% for the assessment year (AY) 2018-19, recording the highest rate in the last five years. The tax base, which includes assessees filing I-T returns along with those whose tax is deducted at source, rose to 8.44 crore in 2018-19, compared with 7.42 crore in FY18. Traders took note of a private report that India imported 4.3 million barrels per day (bpd) of oil in May, a decline of 11% from the previous month, as some refiners plan maintenance work. However, gains remain capped with a report that the Bimal Jalan committee, which is looking into the size of capital reserves that the RBI should hold, again deferred its report submission deadline till Budget next month. Some pessimism also spread among the investors with Finance Minister Nirmala Sitharaman’s statement that the number of wilful defaulters in nationalised banks has increased by over 60 per cent to 8,582 in five years to March 2019. By the end of 2014-15 fiscal, the figure stood at 5,349. Besides, Former Prime Minister Manmohan Singh stated that rising inequality was a concern and the country cannot allow extreme poverty or economic disparity as it is a welfare state.

On the global front, Asian markets were trading mostly in red as traders looked ahead to a meeting between the American and Chinese presidents amid hopes for renewed trade talks. Back home, a private report stated that the tardy progress in the spread of southwest monsoon and prevailing heat wave conditions in many parts of the country have delayed planting in the current kharif season, with the area sown remaining nearly 8% lower than in the previous year.

The BSE Sensex is currently trading at 39142.99, up by 20.03 points or 0.05% after trading in a range of 38946.04 and 39154.99. There were 13 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.26%, while Small cap index was up by 0.08%.

The top gaining sectoral indices on the BSE were Realty up by 1.06%, Energy up by 0.93%, Utilities up by 0.92%, Oil & Gas up by 0.87% and Metal was up by 0.86%, while IT down by 0.49%, TECK down by 0.47%, Capital Goods down by 0.26%, Healthcare down by 0.15%, BANKEX was down by 0.10% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 1.51%, Mahindra & Mahindra up by 1.19%, NTPC up by 1.14%, Vedanta up by 1.10% and ONGC was up by 0.94%. On the flip side, Yes Bank down by 1.61%, Sun Pharma down by 0.99%, Asian Paints down by 0.74%, ICICI Bank down by 0.72% and HCL Tech was down by 0.70% were the top losers.

Meanwhile, Crisil in its latest report has said that greater spread of optical fibre is necessary before 5G becomes a reality and the already stretched telcos will have to invest at least Rs 1 lakh crore in laying fibre networks in the next three years. The estimate excludes the cost of acquiring the spectrum, which has been kept at a high price by the government.

The report further stated that the higher land cost and right of way approvals make fiberisation cost as high as Rs 1 crore per km in metros. The telcos will restrict 5G to metro areas initially where there is a high appetite for data consumption. The cost of acquiring spectrum has been set much higher than that of Britain and South Korea.  Moreover, the report highlighted that the domestic telcos, which are already saddled with debt of Rs 4.3 lakh crore, will have to evolve newer operational models to sustain. Currently, the fiberisation levels for the industry stand at under 30%, compared to 70% which is dictated by the 5G technology.

Besides, the report mentioned that various business models are in vogue to meet high bandwidth demand globally such as hiving-off of assets, diversification of businesses, and sharing them with third-parties. Hiving off fibre and tower assets into a separate entities is one of the prominent business models, adding Bharti Airtel and Reliance Jio have done so to reduce capex, deleverage balance sheets, and to get higher valuation of each entity. The report also noted that large incumbents are in talks to form joint ventures for sharing fibre and also to reduce capex. The other model may be a diversification and infra sharing, which can be a win-win for all.

The CNX Nifty is currently trading at 11701.80, up by 2.15 points or 0.02% after trading in a range of 11651.00 and 11710.75. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were JSW Steel up by 1.80%, Mahindra & Mahindra up by 1.47%, Power Grid up by 1.41%, Dr. Roddy’s Lab up by 1.14% and BPCL was up by 1.13%. On the flip side, Bharti Infratel down by 2.22%, Zee Entertainment down by 1.89%, Yes Bank down by 1.25%, Sun Pharma down by 1.13% and UPL was down by 1.13% were the top losers.

Asian markets were trading mostly in red, Hang Seng decreased 389.05 points or 1.36% to 28,123.95, Nikkei 225 slipped 133.72 points or 0.63% to 21,152.27, Taiwan Weighted dropped 72.13 points or 0.67% to 10,707.32, Shanghai Composite declined 54.77 points or 1.82% to 2,953.38, Straits Times trembled 4.59 points or 0.14% to 3,306.94 and KOSPI was down by 7.68 points or 0.36% to 2,118.65. On the other hand, Jakarta Composite was up by 24.72 points or 0.39% to 6,313.19.